Leading reverse mortgage lender Finance of America (FOA) announced this week that nearly all holders of its outstanding senior notes maturing in 2025 will be eligible for a new bond exchange first announced in June and amended last month. announced that it would take part in the offer. .
Under the proposed amendments, current unsecured bonds due in 2025 with an interest rate of 7.875% could be exchanged for one of two new bond options with the same interest rate due in 2026 (with the option of extending to 2027). with corporate options). ) or a new bond with an interest rate of 10% due in 2029.
Nearly 98% of bondholders due in 2025 had agreed to join the exchange as of October 25, when the offer first expired. In response, the company revised the expiration date to Tuesday, October 29th at 5pm ET.
“We are thrilled to have seen such a high participation rate in our exchange offer,” FOA CEO Graham Fleming said in a statement. “This transaction allows us to benefit from increased financial flexibility and improved capital structure, while aligning our cash flow and debt. We look forward to our continued partnership with our shareholders. Thank you.”
The transaction is available “only to eligible holders of the 2025 Unsecured Notes,” and a memorandum of understanding will be provided detailing the exchange offer and its mechanics, according to a pre-offer announcement.
Replacing current bonds with new secured bonds maturing beyond their original 2025 maturity date and prioritizing bondholders could provide FOA with immediate financial breathing room. . This comes as FOA prepares to release its third quarter financial results on November 6th.
Since entering into an agreement to acquire American Advisors Group (AAG) in April 2023, FOA has made multiple acquisitions to balance its size with its ambitions for reverse mortgages and other retirement solutions. I’ve been going through the motions. The company cut staff and was threatened with delisting from the New York Stock Exchange (NYSE) for not complying with standards for continued listing.
However, in June, the company successfully completed a 10:1 reverse stock split, and profits improved in the second quarter. While the earnings report did not return to the red, corporate leaders noted lower losses and expected business impacts related to Home Equity Conversion Mortgage (HECM) programs and internal marketing efforts. enthusiasm was shown.