UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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| Item 1.01 | Entry Into a Material Definitive Agreement. |
Completion of Public Offering of Senior Notes
On January 22, 2024, Redwood Trust, Inc. (the “Company”) completed its registered underwritten public offering of $60.0 million aggregate principal amount of the Company’s 9.125% Senior Notes due 2029 (the “Notes”) pursuant to an underwriting agreement (the “Underwriting Agreement”) with Wells Fargo Securities, LLC (“Wells Fargo”), Goldman Sachs & Co. LLC (“Goldman”), Morgan Stanley & Co. LLC (“Morgan Stanley”), RBC Capital Markets, LLC (“RBC”) and Keefe, Bruyette & Woods, Inc. (“KBW”), as representatives of the several underwriters named therein (the “Offering”).
The Notes have been registered pursuant to the Registration Statement on Form S-3 (Registration Statement No. 333-263301) (the “Registration Statement”) filed with the Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Act”), including the prospectus supplement filed by the Company with the Commission pursuant to Rule 424(b) under the Act dated January 17, 2024 (the “Prospectus Supplement”) to the prospectus contained in the Registration Statement dated March 4, 2022.
The resulting aggregate net proceeds to the Company from the Offering were approximately $57.460 million, after deducting underwriting discounts and estimated expenses. The Company intends to use the net proceeds from the Offering for general corporate purposes, which may include (i) the repurchase or repayment of a portion of the Company’s 5.625% convertible senior notes due 2024, the 5.75% exchangeable senior notes due 2025 issued by one of its subsidiaries or the Company’s 7.75% convertible senior notes due 2027, and/or (ii) funding of the Company’s business and investment activity, which may include funding the Company’s residential and business purpose lending mortgage banking businesses, acquiring mortgage-backed securities for the Company’s investment portfolio, funding other long-term portfolio investments, and funding strategic acquisitions and investments.
Base Indenture and Supplemental Indenture
The Company issued the Notes under an indenture dated as of March 6, 2013 (the “Base Indenture”) between the Company and Wilmington Trust, National Association, a national banking association, as trustee (the “Trustee”), as supplemented by the fourth supplemental indenture dated as of January 22, 2024, between the Company and the Trustee (the “Supplemental Indenture” and, together with the Base Indenture, the “Indenture”).
The Notes bear interest at a rate of 9.125% per year, payable quarterly in arrears on March 1, June 1, September 1 and December 1 of each year, beginning on June 1, 2024. The Notes are senior unsecured obligations of the Company and rank equal in right of payment with the other existing and future senior unsecured indebtedness of the Company and senior in right of payment to any indebtedness that is contractually subordinated to the Notes. The Notes, however, are effectively subordinated in right of payment to the existing and future secured indebtedness of the Company to the extent of the value of the collateral securing such indebtedness, and structurally subordinated to the claims of the Company’s subsidiaries’ creditors, including trade creditors.
The Notes will mature on March 1, 2029 (the “Maturity Date”), unless earlier redeemed or repurchased by the Company.
Upon the occurrence of a change of control repurchase event (as defined in the Indenture) the Company must offer to repurchase the Notes at a purchase price equal to 101% of the principal amount plus accrued and unpaid interest to, but excluding, the repurchase date.
The Company may redeem the Notes at its option, in whole or in part, at any time and from time to time, on or after March 1, 2026 at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No “sinking fund” is provided for the Notes, which means that the Company is not required to redeem or retire the Notes periodically.
If an event of default (as defined in the Indenture) occurs and is continuing, the Trustee by notice to the Company, or the holders of at least 25% in aggregate principal amount of the Notes then outstanding by notice to the Company and the Trustee, may, and the Trustee at the request of such holders shall, declare 100% of the principal of and accrued and unpaid interest on all the Notes to be due and payable. In the case of an event of default arising out of certain bankruptcy or insolvency events (as set forth in the Indenture), 100% of the principal of and accrued and unpaid interest on the Notes will automatically become due and payable.
A copy of the Base Indenture is filed as Exhibit 4.1 to this Current Report. A copy of the Supplemental Indenture, including the form of Note, is filed as Exhibit 4.2 to this Current Report.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant. |
The information required by this Item 2.03 relating to the Notes and the Indenture is contained in Item 1.01 above and is incorporated herein by reference.
| Item 8.01 | Other Events. |
On January 17, 2024, the Company entered into the Underwriting Agreement with Wells Fargo, Goldman Sachs, Morgan Stanley, RBC and KBW, as representatives of the several underwriters named therein (collectively, the “Underwriters”). Subject to the terms and conditions of the Underwriting Agreement, the Company agreed to sell to the Underwriters, and the Underwriters agreed to purchase from the Company, $60.0 million aggregate principal amount of the Notes. Pursuant to the terms of the Underwriting Agreement, the parties have agreed to indemnify each other against certain liabilities, including liabilities under the Act.
A copy of the Underwriting Agreement is filed as Exhibit 1.1 to this Current Report.
Attached as Exhibit 5.1 to this Current Report is a copy of the opinion of Latham & Watkins LLP relating to the validity of the Notes sold in the Offering. Attached as Exhibit 5.2 to this Current Report is a copy of the opinion of Venable LLP regarding certain Maryland law issues.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: January 22, 2024 | REDWOOD TRUST, INC. | |
| By: | /s/ Brooke E. Carillo | |
| Name: Brooke E. Carillo | ||
| Title: Chief Financial Officer | ||