Arbor Realty Trust,Inc. (NYSE:ABR) Files An 8-K Entry into a Material Definitive AgreementItem 1.01 Entry into a Material Definitive Agreement
On November13, 2017, Arbor Realty Trust,Inc., a Maryland corporation (the “Company”), completed the issuance and sale of $125.0 million aggregate principal amount of its 5.375% Convertible Senior Notes due 2020 (the “Notes”) to an underwriting agreement (the “Underwriting Agreement”) by and among the Company, Arbor Realty Limited Partnership, a Delaware limited partnership, and J.P. Morgan Securities LLC, as representative of the several underwriters named therein (the “Underwriters”), whereby the Company agreed to sell to the Underwriters and the Underwriters agreed to purchase from the Company, subject to and upon the terms and conditions set forth in the Underwriting Agreement, the Notes. In addition, the Company granted the Underwriters the right to purchase, exercisable within a 30-day period, up to an additional $18.75 million aggregate principal amount of the Notes solely to cover over-allotments.
The Notes will be senior unsecured obligations of the Company, bear interest at a rate equal to 5.375% per year, payable semiannually in arrears on May15 and November15 of each year, beginning on May15, 2018 and will mature on November15, 2020 (the “Maturity Date”), unless earlier converted or repurchased. The Company will not have the right to redeem the Notes prior to maturity and no sinking fund is provided for the Notes. The Notes will be convertible prior to August15, 2020 upon the satisfaction of certain conditions and at any time on or after August15, 2020 until the business day preceding the Maturity Date. The Company may settle conversions in cash, shares of the Company’s common stock or a combination thereof, at the Company’s election.
The conversion rate will initially equal 107.7122 shares of common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of approximately $9.28 per share of common stock, representing an approximate 10% conversion premium based on the closing price of the Company’s common stock of $8.44 per share on November7, 2017. The conversion rate will be subject to adjustment upon the occurrence of certain specified events. In addition, following certain corporate events that occur prior to the Maturity Date, the Company will increase the conversion rate for a holder who elects to convert its Notes in connection with such a corporate event in certain circumstances.
If the Company undergoes a fundamental change (as defined in the Supplemental Indenture (as defined below)), holders may require the Company to repurchase for cash all or any portion of their Notes at a fundamental change repurchase price equal to 50% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.
The net proceeds to the Company from the sale of the Notes, after deducting the Underwriters’ discounts and commissions and estimated offering expenses, are expected to be approximately $121.0 million (or approximately $139.2million if the Underwriters’ over-allotment option is exercised in full). The Company intends to use the net proceeds of the offering to make investments relating to the Company’s business and for general corporate purposes. The Company may also use a portion of the net proceeds from this offering to repay certain of the Company’s indebtedness; however, the Company has no current commitments or obligations to do so.
The Notes were issued under the base indenture, dated as of May12, 2014, between the Company and U.S. Bank National Association, as trustee (the “Trustee”), as supplemented by a third supplemental indenture (the “Supplemental Indenture”), dated as of November13, 2017, between the Company and the Trustee with respect to the Notes.
The offer and sale of the Notes were registered with the Securities and Exchange Commission (the “Commission”) to a registration statement on FormS-3 (File No.333-212554) under the Securities Act of 1933, as amended (the “Securities Act”). The material terms of the Notes are described in a prospectus supplement filed by the Company with the Commission dated November7, 2017 to Rule424(b)(5)under the Securities Act.
