ARMOUR Residential REIT, Inc. (NYSE:ARR) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement
On February 15, 2019, ARMOUR Residential REIT, Inc. (the “Company”), entered into a new Equity Sales Agreement (the “Sales Agreement”) with BUCKLER Securities LLC (“BUCKLER”), a broker-dealer and member of the Financial Industry Regulatory Authority (“FINRA”) controlled by the Manager (as defined herein) and the Company’s executive officers, JMP Securities LLC (“JMP”) and Ladenburg Thalmann & Co. Inc. (“Ladenburg”), as sales agents (individually and collectively, the “Agents”), and ARMOUR Capital Management LP, a Delaware limited partnership and the external manager of the Company (the “Manager”), to which the Company may offer and sell, over a period of time and from time to time, through one or more of the Agents, as the Company’s agents, up to 7,000,000 shares of the Company’s common stock, par value $0.001 per share. The Sales Agreement relates to a proposed “at-the-market” offering (the “Offering”).
The common stock to be sold in the Offering will be issued to a prospectus, dated April 26, 2018, and a prospectus supplement (the “ATM Prospectus Supplement”) filed with the Securities and Exchange Commission (the “SEC”) on February 15, 2019, in connection with the Company’s effective shelf registration statement on Form S-3 (Registration No. 333-224469) (the “Registration Statement”). Sales of the Company’s common stock through the Agents, if any, will be made in amounts and at times to be determined by the Company from time to time, but neither the Company nor the Agents have an obligation to sell any of the shares in the Offering. Actual sales will depend on a variety of factors to be determined by the Company from time to time, including (among others) market conditions, the trading price of the Company’s common stock and determinations by the Company of the appropriate sources of funding for the Company. Under the Sales Agreement, the Agents have agreed to use commercially reasonable efforts consistent with their normal trading and sales practices to sell common stock in agency transactions. The Sales Agreement provides that the Agents will be entitled to compensation of up to 2.0% of the gross sales price per share for any of the common stock sold under the Sales Agreement in agency transactions.
Sales of the common stock, if any, under the Sales Agreement may be made by means of transactions that are deemed to be “at-the-market offerings” as defined in Rule 415 under the Securities Act of 1933, as amended, including ordinary brokers’ transactions on the New York Stock Exchange or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices. Neither the Company nor the Agents have an obligation to sell any of the common stock in the Offering, and either party may at any time suspend solicitation and offers under the Sales Agreement or terminate the Sales Agreement. The Company intends to use the proceeds from any sales to acquire additional target assets in accordance with its objectives and strategies and for general corporate purposes.
The Sales Agreement contains customary representations, warranties and agreements of the Company and the Manager and customary conditions to completing future sale transactions, indemnification rights and obligations of the parties and termination provisions.
The Sales Agreement is filed as Exhibit 1.1 to this Current Report on Form 8-K and is incorporated herein by reference. The foregoing description of the Sales Agreement and the transactions contemplated thereby is qualified in its entirety by reference to Exhibit 1.1.
The Company is also filing this Current Report on Form 8-K to provide legal opinions regarding the validity of the shares of common stock to be issued and sold in the Offering and regarding certain tax matters with respect to the Company and the shares of common stock to be issued in the Offering, which opinions are attached hereto as Exhibits 5.1 and 8.1, respectively, and are incorporated herein by reference.
Item 1.02. Termination of a Material Definitive Agreement
On February 13, 2019, the Company provided notice of its termination of (i) that certain Equity Distribution Agreement, dated as of October 11, 2011 (the “2011 Distribution Agreement”), with Deutsche Bank Securities Inc., JMP and Ladenburg acting as sales agents, which such termination shall be effective February 23, 2019, and (ii) that certain ATM Equity OfferingSM Sales Agreement, dated as of May 26, 2017, as amended by Amendment No. 1 to the Sales Agreement, dated October 2, 2017 (the “2017 Sales Agreement”), with Merrill Lynch, Pierce, Fenner & Smith Incorporated and Ladenburg acting as sales agents, which such termination shall be effective February 16, 2019. The 2011 Distribution Agreement and 2017 Sales Agreement each relate to a proposed “at-the-market” offering of up to 5,000,000 shares of the Company’s common stock through such agents. Under each of the 2011 Distribution Agreement and 2017 Sales Agreement, the agents are entitled to 2.0% of the gross sales price per share for any of the shares sold under such agreements. As of the date hereof, the Company has sold 1,937,500 shares under the 2011 Distribution Agreement and 1,766,712 shares under the 2017 Sales Agreement and does not intend to sell any more shares. The Company will not incur any termination penalties as a result of such terminations.
This Current Report on Form 8-K shall not constitute an offer to sell or a solicitation of an offer to buy any securities, nor shall there be any sale of these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.
Item 9.01.Financial Statements and Exhibits.
(d) Exhibits
Armour Residential REIT, Inc. Exhibit
EX-1.1 2 arr8-kbuckleratmex11.htm EXHIBIT 1.1 Exhibit Exhibit 1.1ARMOUR Residential REIT,…
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About ARMOUR Residential REIT, Inc. (NYSE:ARR)
ARMOUR Residential REIT, Inc. (ARMOUR) is an externally managed real estate investment trust (REIT). The Company invests in residential mortgage backed securities issued or guaranteed by the United States Government-sponsored entity (GSE), such as the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac) or guaranteed by the Government National Mortgage Administration (Ginnie Mae) (collectively, Agency Securities). It also may invest in other securities backed by residential mortgages for which the payment of principal and interest is not guaranteed by a GSE or government agency (collectively, Non-Agency Securities). The Company’s securities portfolio consists primarily of Agency Securities backed by fixed rate home loans. The Company is externally managed by ARMOUR Capital Management LP.
