UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
(Exact name of registrant as specified in its charter)
Freddie Mac
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 1.01. Entry into a Material Definitive Agreement.
On September 27, 2019, Freddie Mac (formally known as the Federal Home Loan Mortgage Corporation), acting through the Federal Housing Finance Agency (FHFA) as its Conservator, and the U.S. Department of the Treasury (Treasury) entered into a letter agreement (Letter Agreement) to further amend the Amended and Restated Certificate of Creation, Designation, Powers, Preferences, Rights, Privileges, Qualifications, Limitations, Restrictions, Terms and Conditions of Variable Liquidation Preference Senior Preferred Stock (par value $1.00 per share), dated September 27, 2012 (Senior Preferred Stock Certificate), or to issue a replacement Senior Preferred Stock Certificate, to modify the dividend and liquidation preference provisions of the senior preferred stock effective as of September 30, 2019. A copy of the Letter Agreement is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The principal modifications to be made to the Senior Preferred Stock Certificate pursuant to the Letter Agreement are summarized below:
| • | For each Dividend Period from July 1, 2019 and thereafter, the Applicable Capital Reserve Amount used in determining the dividend payable to Treasury will be $20.0 billion, rather than $3.0 billion as previously provided. |
| • | The Liquidation Preference of the Senior Preferred Stock will be increased, at the end of each fiscal quarter, beginning on September 30, 2019, by an amount equal to the increase in the Net Worth Amount, if any, during the immediately prior fiscal quarter, until such time as the Liquidation Preference will have increased by $17.0 billion. |
Freddie Mac and Treasury also agreed to negotiate and execute an additional amendment to the Amended and Restated Senior Preferred Stock Purchase Agreement dated as of September 26, 2008, between Treasury and Freddie Mac, acting through FHFA as its Conservator, as amended, that further enhances taxpayer protections by adopting covenants broadly consistent with recommendations for administrative reform contained in Treasury’s September 2019 Housing Reform Plan.
As a result of our previous issuance to Treasury of a warrant to purchase shares of our common stock equal to 79.9% of the total number of shares of our common stock outstanding, on a fully diluted basis, we are deemed a related party to the U.S. government. For a discussion of our relationship and transactions with Treasury, see “Introduction - About Freddie Mac - Conservatorship and Government Support for Our Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Conservatorship and Related Matters - Purchase Agreement, Warrant, and Senior Preferred Stock,” and “Note 2: Conservatorship and Related Matters - Related Parties as a Result of Conservatorship” in our Annual Report on Form 10-K filed on February 14, 2019.
Freddie Mac Form 8-K
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
The exhibit listed in the Exhibit Index below is being filed as part of this Current Report on Form 8-K.
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Exhibit Number
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Description of Exhibit
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| 10.1 |
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| 104 |
Cover Page Interactive Data File (embedded within the Inline XBRL document)
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Freddie Mac Form 8-K
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| FEDERAL HOME LOAN MORTGAGE CORPORATION |
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/s/ David M. Brickman |
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| David M. Brickman |
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| Chief Executive Officer |
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Date: October 1, 2019
Freddie Mac Form 8-K