Question-and-Answer Session
(Operator instructions) Your first question comes from the line of Annett Franke; please go ahead.
Annett Franke – FBR Asset Management
Hi, good morning. Larry, quick question you mentioned that you can finally close the tender offer. Do you still have to get some more solution to the override agreement first or has that changed somehow that you can actually close the tender now before resolution can be found to the override concerns?
Larry Goldstone
No, we don’t need resolution to the override agreement. Because we have changed the consideration for the tender, meaning we are not offering cash plus stock anymore, we are only offering stock, and it’s the elimination of the cash component which effectively was a cash dividend to the preferred shareholders that was prohibited under Maryland law and so the elimination of the cash consideration allows the company to go ahead and proceed with an all stock tender and so, assuming that we get the required number of consents and the required number of shares tendered, we believe that the preferred stock tender will in fact get closed next week.
Annett Franke – FBR Asset Management
Okay. And just a second question. Could you talk about how the principal and interest payment on the repo ARM books flows, you had previously mentioned that some of the P&I is retained by the repo lenders and depending on how the cash flow goes, have you booked the full interest income, interest on that repo ARM book in the year in the net interest income or how should we look at that?
Larry Goldstone
Well, we did book all the interest as interest expense and paid down the repo debt at the same time, so we are booking at consistent with our understanding of the way funds should be applied. And then I think secondarily, I’m not sure if you were asking, but the override lenders are continuing to capture all of the principal and interest that’s being generated or earned or paid on the underlying mortgage securities, so they are not remitting any funds back to the company as of today.
Annett Franke – FBR Asset Management
Okay. Thank you very much.
Operator
Thank you. Our next question comes from the line of Bill Thatcher [ph] with Artesia Capital. Please go ahead.
Bill Thatcher – Artesia Capital
Hi, guys. I just wanted to follow up on the prior question about the preferred tender. To understand the 10-Q delay does not at all impact the expected closing of the tender and your understanding right now is all you really need to do is receive 2/3 of each class and you will close the tender on the 19; is that correct?
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