—Preserving shareholder value by adopting a
Section 382 rights plan intended to protect potentially valuable
tax assets—
—Plan would only remain in effect while the
Company operates as taxable C-Corp, and would expire immediately
upon the successful completion of the closed end fund/RIC
conversion—
Ellington Credit Company (“Ellington Credit” or the “Company”)
(NYSE: EARN) announced today that it has adopted a shareholder
rights plan designed to protect shareholder value by preserving the
availability of the Company’s net operating loss carryforwards
(“NOLs”) and other tax attributes under the Internal Revenue Code
of 1986, as amended (the “IRC”) (such plan, the “Tax Asset
Preservation Plan”).
As previously announced, later this year Ellington Credit
intends to convert to a registered closed end fund to be treated as
a regulated investment company (“RIC”) under the IRC, subject to
receiving shareholder approval of certain matters. In the meantime,
the Company is operating as a taxable C-Corp and plans to take
advantage of its significant existing NOLs to offset the majority
of its U.S. federal taxable income.
The Tax Asset Preservation Plan took effect on April 23, 2024
and will only remain in effect while Ellington Credit operates as a
taxable C-Corp, expiring upon the earliest of: (i) conversion to a
closed end fund/RIC, (ii) April 23, 2025, and (iii) the occurrence
of certain other events, as described in the Rights Plan.
The Tax Asset Preservation Plan is substantially similar to
those adopted by numerous other public companies with significant
NOLs.
Ellington Credit’s ability to use the NOLs would be
substantially limited if any “5-percent shareholders” (determined
under Section 382 of the IRC) increase their ownership of the value
of the Company’s stock by more than 50 percentage points over a
rolling three-year period, which the IRC classifies for purposes of
NOL availability as an “ownership change.” The Tax Asset
Preservation Plan is intended to reduce the likelihood of such an
IRC Section 382 “ownership change” at the Company by deterring any
person or group from acquiring beneficial ownership of 4.9% or more
of the Company’s outstanding common stock. The Company’s Board of
Trustees believes that the adoption of the Tax Asset Preservation
Plan is in the best interests of the Company and its shareholders,
given the potential value that the NOLs represent.
Under the Tax Asset Preservation Plan, the rights will initially
trade with the Company’s common stock and will generally become
exercisable only if a person (or any persons acting as a group)
acquires 4.9% or more of Ellington Credit’s outstanding common
stock. If the rights become exercisable, all holders of rights
(other than any triggering person) will be entitled to acquire
additional shares of common stock at a 50% discount or the Company
may exchange each right held by such holders for one share of
common stock.
Under the Tax Asset Preservation Plan, any person which
currently owns 4.9% or more of the Company’s common stock may
continue to own its shares of common stock but may not acquire
additional shares constituting additional ownership of more than
0.5% without triggering the Tax Asset Preservation Plan. The
Company’s Board of Directors has the discretion to exempt any
person or group from the provisions of the Tax Asset Preservation
Plan.
Additional information about the Tax Asset Preservation Plan
will be available on a Form 8-K to be filed by the Company with the
U.S. Securities and Exchange Commission.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements involve
numerous risks and uncertainties. Actual results may differ from
our beliefs, expectations, estimates, and projections and,
consequently, you should not rely on these forward-looking
statements as predictions of future events. Forward-looking
statements are based on our beliefs, assumptions and expectations
of our future operations, business strategies, performance,
financial condition, liquidity and prospects, taking into account
information currently available to us. These beliefs, assumptions,
and expectations are subject to numerous risks and uncertainties
and can change as a result of many possible events or factors, not
all of which are known to us. If a change occurs, our business,
financial condition, liquidity, results of operations and
strategies may vary materially from those expressed or implied in
our forward-looking statements or from our beliefs, expectations,
estimates and projections and, consequently, you should not rely on
these forward-looking statements as predictions of future events.
Forward-looking statements are not historical in nature and can be
identified by words such as "believe," "expect," "anticipate,"
"estimate," "project," "plan," "continue," "intend," "should,"
"would," "could," "goal," "objective," "will," "may," "seek," or
similar expressions or their negative forms, or by references to
strategy, plans, or intentions. Examples of forward-looking
statements in this press release include, without limitation, our
intention to convert to a registered closed end fund to be treated
as a RIC, our ability to use NOLs in the future to offset taxable
income, and the belief that the Tax Asset Preservation Plan is in
the best interest of the Company and its shareholders. The
following factors are examples of those that could cause actual
results to vary from those stated or implied by our forward-looking
statements: changes in interest rates and the market value of our
investments, market volatility, our ability to utilize our NOLs,
our ability to convert to a closed end fund/RIC, including our
ability to obtain shareholder approval of our conversion to a
closed end fund/RIC, and other changes in market conditions and
economic trends, such as changes to fiscal or monetary policy,
heightened inflation, slower growth or recession, and currency
fluctuations. Furthermore, as stated above, forward-looking
statements are subject to risks and uncertainties, including, among
other things, those described under Item 1A of our Annual Report on
Form 10-K and those described in our Current Report on Form 8-K
filed with the SEC on April 1, 2024, each of which can be accessed
through the link to our SEC filings under "For Investors" on our
website (at www.ellingtoncredit.com) or at the SEC's website
(www.sec.gov). Other risks, uncertainties, and factors that could
cause actual results to differ materially from those projected or
implied may be described from time to time in reports we file with
the SEC, including reports on Forms 10-Q, 10-K and 8-K. We
undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events,
or otherwise.
This release and the information contained herein do not
constitute an offer of any securities or solicitation of an offer
to purchase securities. In addition, the release is not a
solicitation of votes or proxies. Any such solicitation will only
be made pursuant to a proxy statement or other appropriate proxy
materials filed with the SEC and labeled as such.
About Ellington Credit Company
Ellington Credit Company, formerly known as Ellington
Residential Mortgage REIT, was initially formed as a real estate
investment trust ("REIT") that invested primarily in residential
mortgage-backed securities ("MBS"). On March 29, 2024, the
Company’s Board of Trustees approved a strategic transformation of
its investment strategy to focus on corporate CLOs, with an
emphasis on mezzanine debt and equity tranches. In connection with
this transformation, the Company revoked its election to be taxed
as a REIT effective January 1, 2024, and rebranded to Ellington
Credit Company. Later in 2024, the Company intends, subject to
shareholder approval of certain matters, to convert to a closed-end
fund and complete its transition from an MBS-focused company to a
CLO-focused company.
Ellington Credit Company is externally managed and advised by
Ellington Credit Company Management LLC, formerly known as
Ellington Residential Mortgage Management LLC, an affiliate of
Ellington Management Group, L.L.C.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240423294392/en/
Investors: Ellington Credit Company Investor Relations (203)
409-3773 info@ellingtoncredit.com or Media: Amanda Shpiner/Grace
Cartwright Gasthalter & Co. for Ellington Credit Company (212)
257-4170 Ellington@gasthalter.com
Grafico Azioni Ellington Credit (NYSE:EARN)
Storico
Da Dic 2024 a Gen 2025
Grafico Azioni Ellington Credit (NYSE:EARN)
Storico
Da Gen 2024 a Gen 2025
