ELLINGTON FINANCIAL INC. Item 1.01 Entry into a Material Definitive Agreement.
Underwriting Agreement
On
The Underwriting Agreement contains customary representations, warranties and covenants of the Company and the Manager, indemnification rights and obligations of the parties and termination provisions. Pursuant to the Underwriting Agreement, the Company agreed to indemnify the Underwriters against certain specified types of liabilities, including liabilities under the Securities Act of 1933, as amended (the "Securities Act"), to contribute to payments the Underwriters may be required to make in respect of these liabilities and to reimburse the Underwriters for certain expenses. In the ordinary course of business, the Underwriters or their affiliates have from time to time in the past provided, and may from time to time in the future provide, investment banking services to the Company for which they have in the past received, and may in the future receive, customary fees.
The offering of Series C Preferred Stock is being made pursuant to the Company's
shelf registration statement on Form S-3 (File No. 333-269386) (the
"Registration Statement"), which became effective upon filing with the
The foregoing description of the material terms of the Underwriting Agreement is qualified in its entirety by reference to the full text of the Underwriting Agreement, a copy of which is attached hereto as Exhibit 1.1 and incorporated herein by reference.
Amendment to Operating Agreement of
In connection with the closing of the offering of the Series C Preferred Stock,
the Limited Liability Company Operating Agreement of
Item 3.03 Material Modification to Rights of Security Holders.
On
The Certificate of Designations provides that the Company will pay, when, as and
if declared by the Company's board of directors, out of funds legally available
for the payment of dividends, cumulative cash dividends based on the stated
liquidation preference of
The Series C Preferred Stock ranks senior to the Company's common stock with respect to rights to the payment of dividends and the distribution of assets upon the liquidation, dissolution or winding up of the Company.
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The Series C Preferred Stock will not be redeemable before
Upon the occurrence of a Change of Control, the Company may, as its option, upon
not less than 30 nor more than 60 days' written notice, redeem the Series C
Preferred Stock, in whole or in part, within 120 days after the first date on
which such Change of Control occurred, for cash at a redemption price of
The Series C Preferred Stock has no stated maturity, is not subject to any sinking fund or mandatory redemption and will remain outstanding indefinitely unless repurchased or redeemed by the Company or converted into the Company's common stock in connection with a Change of Control by the holders of the Series C Preferred Stock.
Upon the occurrence of a Change of Control, provided that the Common Stock Authorization (as defined in the Certificate of Designations) has occurred at or prior to such Change of Control, each holder of the Series C Preferred Stock will have the right (subject to the Company's election to redeem the Series C Preferred Stock in whole or in part, as described above, prior to the Change of Control Conversion Date (as defined in the Certificate of Designations)) to convert some or all of the shares of the Series C Preferred Stock held by such holder on the Change of Control Conversion Date into a number of shares of the Company's common stock per share of Series C Preferred Stock determined by formula, in each case, on the terms and subject to the conditions described in the Certificate of Designations, including provisions for the receipt, under specified circumstances, of alternative consideration.
If, following a Change of Control, the Common Stock Authorization has not occurred at or prior to such Change of Control and the Company has not exercised its option to redeem the Series C Preferred Stock, the Company will increase the cumulative dividend rate by 300 basis points per annum. Holders of shares of the Series C Preferred Stock will be entitled to receive cumulative cash dividends from, and including, the first date on which the Change of Control has occurred at the increased rate for so long as the Company has not exercised its option to redeem the Series C Preferred Stock.
There are restrictions on ownership of the Series C Preferred Stock intended to allow the Company to qualify and maintain its qualification as a REIT. Holders of Series C Preferred Stock generally have no voting rights, but have limited voting rights if the Company fails to pay dividends for six or more quarterly dividend periods (whether or not consecutive) and under certain other circumstances.
The foregoing description of the terms of the Series C Preferred Stock is
qualified in its entirety by reference to the Certificate of Designations, a
copy of which is filed as Exhibit 3.7 to the Company's Form 8-A filed on
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Item 5.03 Amendments to Articles of Incorporation or Bylaws; Changes in Fiscal Year.
The information set forth above under Item 3.03 of this report is hereby incorporated by reference into this Item 5.03.
Cautionary Statement Regarding Forward-Looking Statements
This Current Report on Form 8-K 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. Our 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 not historical in nature and can be identified by words such as
"anticipate," "estimate," "will," "should," "may," "expect," "project,"
"believe," "intend," "seek," "plan" and similar expressions or their negative
forms, or by references to strategy, plans, or intentions. Our results can
fluctuate from month to month depending on a variety of factors, some of which
are beyond our control and/or are difficult to predict, including, without
limitation, changes in interest rates, changes in mortgage default rates and
prepayment rates, and other changes in market conditions and economic trends.
Furthermore, 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 our Quarterly Report on Form 10-Q for the quarter ended
Item 9.01 Financial Statements and Exhibits.
A copy of the opinion of
(d) Exhibits. The following exhibits are being filed with this Current Report on
Form 8-K.
Exhibit No. Description
1.1 Underwriting Agreement, dated as of February 2, 2023, by and among Ellington
Financial Inc. and Ellington Financial Management LLC, on the one hand, and
Piper Sandler & Co., as representative of the several underwriters named
therein, on the other hand.
3.1 Certificate of Designations of Ellington Financial Inc., designating the
Company's 8.625% Series C Fixed-Rate Reset Cumulative Redeemable Preferred
Stock, par value $0.001 per share (incorporated herein by reference to Exhibit
3.7 of Ellington Financial Inc.'s Form 8-A filed on February 3, 2023).
4.1 Form of certificate representing the 8.625 % Series C Fixed-Rate Reset
Cumulative Redeemable Preferred Stock of Ellington Financial Inc. (incorporated
herein by reference to Exhibit 4.3 of Ellington Financial Inc.'s Form 8-A filed
on February 3 , 2023).
Opinion of Vinson & Elkins L.L.P. as to the legality of the Series C Preferred
5.1 Stock.
10.1 Fourth Amendment to Limited Liability Company Operating Agreement of Ellington
Financial Operating Partnership LLC, by and among the Company, Ellington
Financial Operating Partnership LLC and EMG Holdings, L.P., dated as of January
1, 2013.
23.1 Consent of Vinson & Elkins L.L.P. (included in Exhibit 5.1).
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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