Affinion Group Holdings, Inc. And Affinion Group, Inc. Announce Satisfaction Of Minimum Condition …

The Exchange Offer, Consent Solicitation and Rights Offering are being made, and the New Notes and equity securities to be issued in the Exchange …

STAMFORD, Conn., March 18, 2019 /PRNewswire/ — Affinion Group Holdings, Inc. (“Affinion Holdings”) and Affinion Group, Inc. (“Affinion Group”) announced today that, as of 5:00 p.m., New York City time, on March 15, 2019 (the “Consent Time”), holders of $670,326,317 aggregate principal amount (or approximately 98.4%) of Affinion Group’s Senior Cash 12.5% / PIK Step-Up to 15.5% Notes due 2022 (the “Existing Notes”) have validly tendered and not withdrawn their Existing Notes prior to the Consent Time in connection with Affinion Group’s previously announced private exchange offer (the “Exchange Offer”) and consent solicitation (the “Consent Solicitation”) relating to the Existing Notes, thereby satisfying the Minimum Condition (as defined below) in the Exchange Offer requiring the valid tender of at least 98% of the aggregate principal amount of Existing Notes.

As a result of the occurrence of the Consent Time, tendered Existing Notes in the Exchange Offer may not be withdrawn. The Exchange Offer is scheduled to expire at 5:00 p.m., New York City time, on April 5, 2019 (as such date and time may be extended, the “Expiration Time”).

Affinion Holdings and Affinion Group also announced today that as of the Consent Time (1) the consents delivered in the Exchange Offer for the Existing Notes exceeded the amount required under the indenture governing the Existing Notes (the “Existing Indenture”) to approve the adoption of certain amendments (the “Amendments”) to (a) eliminate substantially all of the restrictive covenants, (b) make amendments to certain existing terms and (c) eliminate certain events of default and related provisions in the Existing Indenture.

Based on the receipt of the required consents to the Amendments, Affinion Group and the trustee under the Existing Indenture will promptly enter into a supplemental indenture reflecting the Amendments. Such Amendments will not become operative unless and until the Exchange Offer is consummated.

Consummation of the Exchange Offer and Consent Solicitation is conditioned upon the satisfaction or waiver of the conditions set forth in the confidential offering memorandum, consent solicitation statement and rights offering (the “Offering Memorandum”) and the related letter of transmittal and consent (the “Letter of Transmittal”). Such conditions include, among other things, (1) the valid tender and acceptance by us of at least 98% of the aggregate principal amount of Existing Notes in the Exchange Offer (the “Minimum Condition”) and (2) the prior or concurrent consummation of the rights offering (the “Rights Offering”) giving Eligible Holders of Existing Notes the right to purchase at par up to $288.0 million principal amount of 18.0% Senior PIK Notes due 2024 (the “New Notes”) of Affinion Group on and subject to the terms and conditions set forth in the Offering Memorandum. Subject to the terms and conditions set forth in the Offering Memorandum and the Support Agreement, Affinion Holdings and Affinion Group may waive any of these or any other conditions to the consummation of the Exchange Offer and Consent Solicitation.

The Exchange Offer and the Rights Offering (as defined below) are being made only (a) in the United States, to holders of Existing Notes who are (i)(x) “qualified institutional buyers” (as defined in Rule 144A under the Securities Act) or (y) institutional “accredited investors” within the meaning of Rule 501 (a)(1), (2), (3), (7) or (8) of Regulation D under the Securities Act and (ii) “institutional accounts” within the meaning of Rule 4512(c) of the Financial Industry Regulatory Authority and (b) outside the United States, to holders of Existing Notes who are not “U.S. persons” (as defined in Rule 902 under the Securities Act) in reliance on Regulation S of the Securities Act. The holders of Existing Notes who are eligible to participate in the Exchange Offer and the Rights Offering pursuant to at least one of the foregoing conditions are referred to herein as “Eligible Holders.”

The Exchange Offer, Consent Solicitation and Rights Offering are being made solely to Eligible Holders upon the terms and subject to the conditions set forth in the Offering Memorandum, the Letter of Transmittal and the related subscription form (the “Subscription Form”), each dated March 4, 2019 (as such documents may be amended from time to time). Only holders who are Eligible Holders may receive copies of the Offering Memorandum, the Letter of Transmittal and the Subscription Form and participate in the Exchange Offer and Rights Offering. The Information and Exchange Agent for the Exchange Offer and the Subscription Agent for the Rights Offering is Epiq Corporate Restructuring, LLC (“Epiq”). Holders of Existing Notes wishing to certify that they are Eligible Holders in order to be eligible to receive a copy of the Offering Memorandum, Letter of Transmittal and Subscription Form should complete and return the eligibility letter prepared by Affinion Holdings and Affinion Group (the “Eligibility Letter”) as specified in the Eligibility Letter, or contact Epiq to request the Eligibility Letter by emailing Tabulation@epiqglobal.com and referencing “Affinion” in the subject line.

This press release is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell any securities. The Exchange Offer, Consent Solicitation and Rights Offering are being made, and the New Notes and equity securities to be issued in the Exchange Offer are being offered, only to Eligible Holders. The New Notes and equity securities to be issued in the Exchange Offer have not been registered under the Securities Act or under any state securities laws, and the New Notes and equity securities to be issued in the Exchange Offer may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act, and accordingly, are subject to significant restrictions on transfer and resale as more fully described in the Offering Memorandum, the Letter of Transmittal and the Subscription Form.

About Affinion Group

Affinion is one of the world’s leading loyalty and customer engagement solutions companies servicing over 68.7 million consumers with approximately 2,900 client partner relationships and over 40 years of experience as of December 31, 2018. We design, administer and fulfill loyalty and customer engagement programs that strengthen and expand the value of relationships for our leading clients around the globe, including many of the largest and most respected companies in the financial services, retail, travel, and internet commerce sectors. Based in Stamford, CT, the Company has approximately 3,100 employees located across the globe. For more information, visit www.affinion.com.

Safe Harbor Statement Under the U.S. Private Securities Litigation Reform Act of 1995

This press release may contain “forward-looking” statements as defined by the Private Securities Litigation Reform Act of 1995 or by the U.S. Securities and Exchange Commission (SEC) in its rules, regulations and releases. These statements include, but are not limited to, the ability to complete the Exchange Offer and the Rights Offerings, discussions regarding industry outlook, Affinion Holdings’ and Affinion Group’s expectations regarding the performance of its business, its liquidity and capital resources, its guidance for 2018 and the other non-historical statements. These statements can be identified by the use of words such as “believes” “anticipates,” “expects,” “intends,” “plans,” “continues,” “estimates,” “predicts,” “projects,” “forecasts,” and similar expressions. All forward-looking statements are based on management’s current expectations and beliefs only as of the date of this press release and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those discussed in, or implied by, the forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, risks related to general economic and business conditions and international and geopolitical events, a downturn in the credit card industry or changes in the techniques of credit card issuers, industry trends, foreign currency exchange rates, the effects of a decline in travel on the Company’s travel fulfillment business, termination or expiration of one or more agreements with its marketing partners or a reduction of the marketing of its services by one or more of its marketing partners, the Company’s substantial leverage, restrictions contained in its debt agreements, its inability to compete effectively, and other risks identified and discussed from time to time in reports filed by Affinion Holdings with the SEC, including Affinion Holdings’ most recent Annual Report on Form 10-K for the year ended December 31, 2017 and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2018, June 30, 2018 and September 30, 2018. Readers are strongly encouraged to review carefully the full cautionary statements described in these reports. Except as required by law, Affinion Holdings and Affinion Group undertake no obligation to revise or update publicly any forward-looking statements to reflect events or circumstances after the date of this press release, or to reflect the occurrence of unanticipated events or circumstances.

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SOURCE Affinion Group

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Great Ajax Corp. Announces Results for the Quarter Ended December 31, 2018

On December 31, 2018, our Board of Directors declared a special cash dividend of $0.05 per share of our common stock, which was paid on January …

NEW YORK–(BUSINESS WIRE)–Great Ajax Corp. (NYSE: AJX), a Maryland corporation that is a real estate investment trust, today announces its results of operations for the quarter ended December 31, 2018. We focus primarily on acquiring, investing in and managing a portfolio of RPLs secured by single-family residences and commercial properties and, to a lesser extent, NPLs. In addition to our continued focus on residential RPLs, we also originate and acquire SBCs secured by multi-family retail/residential mixed use properties and acquire multi-family retail/residential mixed use and commercial properties.

Financial Results (Unaudited)

($ in thousands except per share amounts)

December 31,

2018

September 30,

2018

June 30, 2018

March 31,

2018

December 31,

2017

Loan interest income(1,2,3) $ 26,146 $ 26,261 $ 26,158 $ 25,445 $ 24,231
Debt securities and beneficial interests(4) $ 1,155 $ 444 $ 238 $ 131 $ 133
Total revenue, net(1,5) $ 13,894 $ 14,750 $ 14,777 $ 14,743 $ 13,797
Consolidated net income(1) $ 7,307 $ 7,495 $ 8,213 $ 8,322 $ 6,638
Net income per basic share $ 0.35 $ 0.35 $ 0.40 $ 0.41 $ 0.34
Average equity(1) $ 332,002 $ 323,750 $ 319,815 $ 318,839 $ 302,482
Average total assets(1) $ 1,525,759 $ 1,381,742 $ 1,362,843 $ 1,377,537 $ 1,230,026
Average daily cash balance(6) $ 68,926 $ 40,674 $ 41,617 $ 51,540 $ 47,717
Average carrying value of RPLs(1) $ 1,248,613 $ 1,177,586 $ 1,182,904 $ 1,199,638 $ 1,046,126
Average carrying value of NPLs(1) $ 41,438 $ 38,237 $ 40,767 $ 40,593 $ 43,400
Average carrying value of originated SBC loans $ 13,250 $ 11,439 $ 11,784 $ 11,629 $ 11,273
Average carrying value of debt securities and beneficial interests $ 72,535 $ 32,693 $ 16,262 $ 6,543 $ 6,496
Average asset level debt balance(1,7) $ 1,089,285 $ 948,893 $ 941,533 $ 961,853 $ 840,882

____________________________________________________________

(1) Reflects the impact of consolidating the assets, liabilities and non-controlling interest of Ajax Mortgage Loan Trust 2017-D (“2017-D”) and Ajax Mortgage Loan Trust 2018-C (“2018-C”), which are 50% and 37%, respectively, owned by third-party institutional accredited investors.
(2) Loan interest income excludes interest income from debt securities and bank account balances.
(3) Loan interest income for the December quarter and September quarter is net of impairments of $0.8 million and $0.4 million, respectively, on our loan pools.
(4) Interest income on investment in debt securities and beneficial interests issued by our joint ventures is net of servicing fees.
(5) Total revenue includes net interest income, income from equity method investments and other income.
(6) Average daily cash balance includes cash and cash equivalents, and excludes cash held in trust.
(7) All quarters have been updated to reflect average asset level debt balance from total average debt balance.

Our consolidated net income decreased $0.2 million for the quarter ended December 31, 2018 compared to the quarter ended September 30, 2018, primarily due to an increase in interest expense as we increased our average cash balances early in the quarter in anticipation of year end acquisitions, and deployed cash in multi-family investments. Additionally, to establish our sixth securitization of the year, Ajax Mortgage Loan Trust 2018-F, we placed $18.8 million, and our joint venture partner placed $75.0 million in a prefunding account for 27 days during the month of December. In January 2019, $52.2 million of the prefunding account was used to acquire mortgage loans, and the remainder was returned as a distribution to the debt and beneficial interest holders.

Our interest income on loans declined slightly for the quarter ended December 31, 2018 due to impairments in the amount of $0.8 million on certain of our 2014 and 2015 NPL pools as compared to $0.4 million for the quarter ended September 30, 2018. The impairments are driven by small remaining pool size in which cash flow fluctuations on individual loans is not offset by the small remaining pool. Despite the impairments on these two pools, we continue to experience a sustained level of increased performance across the majority of our loan pools.

The majority of our new investments during the quarter were recorded as investments in debt securities and beneficial interests in our joint ventures. Interest income from our investments in debt securities and beneficial interests issued by our non-consolidated joint ventures is recorded net of servicing fees. This is different than our investments in mortgage loans that are recorded on a gross basis with the offsetting servicing fee recorded as expense in a separate income statement line. The impact of netting the servicing fee against gross interest income reduced the weighted average yield on our investments in debt securities and beneficial interests for the quarter ended December 31, 2018 by approximately 77 basis points on an annualized basis as compared to a similar investment in a whole loan mortgage pool.

Other income was higher for the quarter ended December 31, 2018 compared to the quarter ended September 30, 2018 due to the realized gains on the sales of debt and equity securities and realized gains on sales of our real estate-owned (“REO”) properties.

We recorded $0.7 million in impairments on our REO held-for-sale portfolio in real estate operating expense for the quarter ended December 31, 2018 as compared to $0.9 million for the quarter ended September 30, 2018. We continue to liquidate our REO properties held-for-sale at a faster rate than they are being acquired through foreclosures, with 34 properties sold in the fourth quarter while 20 were added.

We collected $57.1 million on our mortgage loan and REO portfolios through loan payments, loan payoffs and sales of REO during the quarter, and ended the fourth quarter with $55.1 million in cash and cash equivalents. Of the $57.1 million in cash collectionswe received $21.8 million from loans paying the full amount of principal, past due interest and charges.

During the quarter ended December 31, 2018, we acquired $63.3 million of RPLs with an aggregate UPB of $71.0 million, and underlying collateral values of $102.8 million and we acquired $4.0 million of NPLs with an aggregate UPB of $4.3 million and underlying collateral values of $6.0 million. We originated two SBC loans with UPB of $1.6 million that represented 59.6% of the underlying collateral value of $2.6 million, and ended the quarter with $1,310.9 million of mortgage loans with an aggregate UPB of $1,481.7 million. Mortgage loans purchased during the fourth quarter and held as of quarter-end were on our consolidated balance sheet for a weighted average of 66 days during the quarter. During the quarter, we also acquired four commercial properties for $9.5 million.

On November 19, 2018, we completed the sale of an additional $15.9 million aggregate principal amount of our 7.25% convertible senior notes due 2024, issued at a discount to par, which combined with the notes issued in April and August 2017 form a single series of securities. We intend to use the net proceeds of the offering to acquire additional mortgage loan pools and other real estate assets. We expect to securitize the majority of these loans in the first quarter of 2019, and intend to use the resulting net proceeds to acquire additional loan pools and securities and to generate additional interest income to offset the interest expense on the convertible notes.

On December 31, 2018, our Board of Directors declared a special cash dividend of $0.05 per share of our common stock, which was paid on January 31, 2019 to our common stockholders of record as of January 15, 2019.

During the quarter ended December 31, 2018, we co-invested with a third-party institutional accredited investor to form $586.2 million of joint ventures, and retained $126.5 million of varying classes of related securities, to end the year with $168.9 million of investments in securities. We acquired 20.0% of each class of Ajax Mortgage Loan Trust 2018-E (“2018-E”) for a net investment of $19.9 million, 20.0% of each class of Ajax Mortgage Loan Trust 2018-F (“2018-F”) for a net investment of $49.9 million, and 25.0% of each class of Ajax Mortgage Loan Trust 2018-G (“2018-G”) for a net investment of $56.7 million.

2018-E acquired 512 RPLs with UPB of $114.8 million and an aggregate property value of $173.1 million. The senior securities represent 75% of the UPB of the underlying mortgage loans and carry a 4.38% interest rate. Based on the structure of the transaction we do not consolidate 2018-E under GAAP.

2018-F acquired 994 RPLs and NPLs with UPB of $240.0 million and an aggregate property value of $340.4 million that occurred in two transactions. The first transaction consisted of a pool of 723 RPLs with UPB of $179.9 million, which closed during the quarter ended December 31, 2018, and the second pool consisted of a pool of 271 NPLs with UPB of $60.1 million, which closed in January 2019. The second pool purchase was prefunded at the time of the closing of the joint venture with $93.8 million. After our loan due diligence process, the joint venture only purchased $52.2 million and the remainder was refunded back to the joint venture partners on January 25, 2019. The senior securities represent 75% of the UPB of the underlying mortgage loans and carry a 4.38% interest rate. Based on the structure of the transaction we do not consolidate 2018-F under GAAP.

2018-G acquired 667 NPLs with UPB of $231.4 million and an aggregate property value of $425.7 million. The senior securities represent 75% of the UPB of the underlying mortgage loans and carry a 4.38% interest rate. Based on the structure of the transaction we do not consolidate 2018-G under GAAP.

Our investments in the varying classes of securities from 2018-E, 2018-F and 2018-G were on our balance sheet for a weighted average of 20 days out of the quarter. Our Servicer, in which we hold an 8% interest and have warrants that may be exercised for up to an additional 12% interest, also services the loans acquired by the joint ventures in which we are parties.

Portfolio Acquisitions

($ in thousands)

December 31,

2018

September 30,

2018(1)

June 30, 2018 March 31, 2018

December 31,

2017(2)

RPLs
Count 388 271 64 87 1,211
UPB $ 71,049 $ 69,211 $ 15,549 $ 19,699 $ 241,309
Purchase price $ 63,304 $ 64,428 $ 14,313 $ 17,566 $ 219,236
Purchase price % of UPB 89.1 % 93.1 % 92.1 % 89.2 % 90.9 %
NPLs
Count 25 11
UPB $ 4,269 $ 1,700 $ $ $
Purchase price $ 3,979 $ 1,431 $ $ $
Purchase price % of UPB 93.2 % 84.2 % % % %

____________________________________________________________

(1) Includes the impact of 256 mortgage loans with a purchase price of $47.4 million and UPB of $52.8 million acquired through a 63% owned joint venture that we consolidate.
(2) Includes the impact of 1,003 mortgage loans with a purchase price of $177.3 million and UPB of $194.3 million acquired in the fourth quarter of 2017 through a 50% owned joint venture that we consolidate.

The following table provides an overview of our portfolio at December 31, 2018 ($ in thousands):

No. of loans 7,111 Weighted average coupon 4.54 %
Total UPB $ 1,481,719 Weighted average LTV(4) 85.9 %
Interest-bearing balance $ 1,383,978 Weighted average remaining term (months) 312
Deferred balance(1) $ 97,741 No. of first liens 7,085
Market value of collateral(2) $ 2,024,831 No. of second liens 26
Price/total UPB(3) 82.1 % No. of rental properties 21
Price/market value of collateral 62.3 % Capital invested in rental properties $ 17,854
Re-performing loans 96.4 % No. of REO held-for-sale 102
Non-performing loans 2.8 % Market value of REO held-for-sale(5) $ 21,143
Originated SBC loans 0.8 %

____________________________________________________________

(1) Amounts that have been deferred in connection with a loan modification on which interest does not accrue. These amounts generally become payable at maturity.
(2) As of date of acquisition.
(3) Our loan portfolio consists of fixed rate (53.8% of UPB), ARM (10.1% of UPB) and Hybrid ARM (36.1% of UPB) mortgage loans.
(4) UPB as of December 31, 2018 divided by market value of collateral and weighted by the UPB of the loan.
(5) Market value of other REO is the estimated expected gross proceeds from the sale of the REO less estimated costs to sell, including repayment of servicer advances.

Subsequent Events

During January and February 2019, we acquired 38 residential RPLs and two SBC RPLs with aggregate UPB of $8.5 million and $1.6 million in four transactions from four different sellers for our own account. The loans were acquired at 84.8%, and 98.7% of UPB, respectively, and 59.1% and 66.5% of the estimated market value of the underlying collateral of $12.2 million, and $2.4 million, respectively. Additionally, as stated previously, in 2018-F, we used $52.2 million of the prefunding amount to acquire 271 NPLs. The purchase price of the NPLs equaled 86.9% of UPB and 60.2% of the estimated market value of the underlying collateral of $86.7 million. The remaining $41.6 million of the prefunding amount was distributed to the debt and beneficial interest holders on January 25, 2019. Our portion of the distribution of the excess prefunding amount was $8.3 million.

Additionally, we agreed to acquire, subject to due diligence, 1,560 RPLs, 14 SBC RPLs and 417 NPLs with UPB of $299.3 million, $6.9 million and $147.9 million, respectively, in seven transactions from seven different sellers. The purchase price of the residential RPLs equals 93.6% of UPB and 55.4% of the estimated market value of the underlying collateral of $505.5 million. The purchase price of the SBC RPLs equals 102.2% of UPB and 54.5% of the estimated market value of the underlying collateral of $12.9 million. The purchase price of the NPLs equals 96.2% of UPB, 49.9% of the estimated market value of the underlying collateral of $285.1 million. The majority of these loans are expected to be acquired through joint ventures with institutional accredited investors.

We also agreed to acquire three commercial properties for an aggregate purchase price of $5.6 million in three separate transactions from three different sellers.

On January 25, 2019, our Board of Directors approved the Second Amended and Restated Management Agreement (“the Amendment”) with Thetis Asset Management LLC, our manager, which changed the calculation method for the quantity of our shares of common stock provided to our manager as compensation for the base management fee to be determined as the average of the closing prices of the common stock on the five business days preceding the record date of the most recent regular quarterly dividend. The Amendment also changed the calculation pursuant to which we may be required to pay an incentive fee to our Manager. Under the Amendment, our manager will be entitled to a quarterly incentive fee, if the sum of our dividends on our common stock paid out of taxable net income, and our distributions on our externally-held operating partnership units paid out of our taxable net income, and our increase in book value, all relative to the applicable quarter and calculated per-share on an annualized basis, exceed 8%. Our manager will also be entitled to an annual incentive fee applicable to the calendar year if the same measurements noted above produce an annualized return for the year in excess of 8%.

On January 25, 2019, we agreed to an interest rate step-up of 300 basis points on the class A senior secured notes issued as part of the 2017-D securitization, of which, $177.2 million UPB was outstanding at December 31, 2018, to take effect on the payment date in April 2021. We currently own 50% of each class of securities in 2017-D, but consolidate the entire amount under GAAP.

On February 6, and February 8, 2019, we sold debt securities from our 2018-E and 2018-F securitizations which we had retained as investments. The securities’ aggregate carrying value was $39.6 million and total proceeds were $39.6 million.

On February 25, 2019, our Board of Directors declared a dividend of $0.32 per share, to be paid on March 29, 2019 to our common stockholders of record as of March 15, 2019.

On February 25, 2019, the Board authorized an increase in the annual compensation of our independent directors from $75,000 to $100,000, 40% of which is payable in shares of our common stock and 60% in cash, to be effective as of April 1, 2019. The value of the shares is determined in the same manner as the value of the shares to be paid to our Manager as part of its base management fee.

Conference Call

Great Ajax Corp. will host a conference call at 5:00 p.m. EST, Tuesday, March 5, 2019 to review our financial results for the quarter. A live Webcast of the conference call will be accessible from the Investor Relations section of our website www.great-ajax.com. An archive of the Webcast will be available for 90 days.

About Great Ajax Corp.

Great Ajax Corp. is a Maryland corporation that is a real estate investment trust, that focuses primarily on acquiring, investing in and managing RPLs secured by single-family residences and, to a lesser extent, NPLs. We also originate in loans secured by multi-family residential and smaller commercial mixed use retail/residential properties, as well as in the properties directly. We are externally managed by Thetis Asset Management LLC. Our mortgage loans and other real estate assets are serviced by Gregory Funding LLC, an affiliated entity. We have elected to be taxed as a real estate investment trust under the Internal Revenue Code.

Forward-Looking Statements

This press release contains certain forward-looking statements. Words such as “believes,” “intends,” “expects,” “projects,” “anticipates,” and “future” or similar expressions are intended to identify forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions, many of which are beyond the control of Great Ajax, including, without limitation, the risk factors and other matters set forth in our Annual Report on Form 10-K for the period ended December 31, 2018 when filed with the SEC. Great Ajax undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by law.

GREAT AJAX CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands except per share amounts)
Three months ended

December 31,

2018

September 30,

2018

June 30, 2018

March 31,

2018

(unaudited) (unaudited) (unaudited) (unaudited)

INCOME:

Interest income $ 28,484 $ 27,416 $ 26,690 $ 25,591
Interest expense (15,045 ) (12,997 ) (12,799 ) (12,494 )
Net interest income 13,439 14,419 13,891 13,097
Provision for loan losses (799 ) (365 )
Net interest income after provision for loan losses 12,640 14,054 13,891 13,097
Income from equity method investments 134 239 197 192
Other income 1,120 457 689 1,454
Total income 13,894 14,750 14,777 14,743

EXPENSE:

Related party expense – loan servicing fees 2,550 2,457 2,672 2,469
Related party expense – management fee 1,597 1,456 1,440 1,532
Loan transaction expense 24 (25 ) 35 355
Professional fees 582 482 506 609
Real estate operating expense 858 1,001 944 449
Other expense 1,014 964 965 991
Total expense 6,625 6,335 6,562 6,405
Loss on debt extinguishment 836
Income before provision for income tax 7,269 7,579 8,215 8,338
Provision for income tax (38 ) 84 2 16
Consolidated net income 7,307 7,495 8,213 8,322
Less: consolidated net income attributable to non-controlling interests 711 937 692 657
Consolidated net income attributable to common stockholders $ 6,596 $ 6,558 $ 7,521 $ 7,665
Basic earnings per common share $ 0.35 $ 0.35 $ 0.40 $ 0.41
Diluted earnings per common share $ 0.34 $ 0.34 $ 0.37 $ 0.38
Weighted average shares – basic 18,771,423 18,691,393 18,595,769 18,508,089
Weighted average shares – diluted 27,163,859 26,592,806 26,476,817 26,395,158
GREAT AJAX CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands except per share amounts)
December 31, 2018 December 31, 2017

ASSETS

Cash and cash equivalents $ 55,146 $ 53,721
Cash held in trust 24 27,041
Mortgage loans, net(1,4) 1,310,873 1,253,541
Property held-for-sale, net(2) 19,402 24,947
Rental property, net 17,635 1,284
Investments at fair value 146,811 6,285
Investments in beneficial interests 22,086
Receivable from servicer 14,587 17,005
Investment in affiliates 8,653 7,020
Prepaid expenses and other assets 7,654 4,894
Total assets $ 1,602,871 $ 1,395,738

LIABILITIES AND EQUITY

Liabilities:
Secured borrowings, net(1,3,4) $ 610,199 $ 694,040
Borrowings under repurchase transactions 534,089 276,385
Convertible senior notes, net(3) 117,525 102,571
Management fee payable 881 750
Accrued expenses and other liabilities 5,898 4,554
Total liabilities 1,268,592 1,078,300
Equity:
Preferred stock $0.01 par value; 25,000,000 shares authorized, none issued or outstanding
Common stock $.01 par value; 125,000,000 shares authorized, 18,909,874 shares at December 31, 2018 and 18,588,228 shares at December 31, 2017 issued and outstanding 189 186
Additional paid-in capital 260,427 254,847
Treasury stock (270 )
Retained earnings 41,063 35,556
Accumulated other comprehensive income/(loss) (575 ) (233 )
Equity attributable to stockholders 300,834 290,356
Non-controlling interests(5) 33,445 27,082
Total equity 334,279 317,438
Total liabilities and equity $ 1,602,871 $ 1,395,738

___________________________________________________________

(1) Mortgage loans, net include $900.2 million and $996.2 million of loans at December 31, 2018 and December 31, 2017, respectively, transferred to securitization trusts that are variable interest entities (“VIEs”); these loans can only be used to settle obligations of the VIEs. Secured borrowings consist of notes issued by VIEs that can only be settled with the assets and cash flows of the VIEs. The creditors do not have recourse to the primary beneficiary (Great Ajax Corp.). Mortgage loans, net include $1.2 million and $0 of allowance for loan losses at December 31, 2018 and December 31, 2017, respectively.
(2) Property held-for-sale, net, includes valuation allowances of $1.8 million and $1.8 million at December 31, 2018 and December 31, 2017, respectively.
(3) Secured borrowings and convertible senior notes are presented net of deferred issuance costs.
(4)

As of December 31, 2018, balances for Mortgage loans, net include s $377.0 million and Secured borrowings, net of deferred costs includes $231.9 million from the 50.0% and 63.0% owned joint ventures. As of December 31, 2017, balances for Mortgage loans, net includes $177.1 million and Secured borrowings, net of deferred costs includes $88.4 million from the 50.0% owned joint venture, all of which we consolidate under U.S. GAAP.

(5)

Non-controlling interests includes $20.4 million at December 31, 2018, from the 50.0% and 63.0% owned joint ventures. Non-controlling interests includes $14.0 million at December 31, 2017, from a 50% owned joint venture, all of which we consolidate under U.S. GAAP.

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Initial Coin Offerings (ICOs) Taking Advantage Of Form-D Security Filings to Bypass SEC Ban

2018 has seen close to 200 ICO projects approved by the SEC in 2018. It is because of a regulatory loophole. Instead of promoting their products to …
Nearly 300 Initial Coin Offerings Used the Form D System to Receive SEC Approval

2018 has seen close to 200 ICO projects approved by the SEC in 2018. It is because of a regulatory loophole. Instead of promoting their products to the general public, companies launching an ICO only offered people considered to be accredited investors by the SEC the chance to invest in their products.

Form D in Detail

Regulation D provides exemptions for private placement offerings. Typically, these offerings are conducted by smaller companies and can be used to raise capital via either debt or equity sales. The big advantage for many issuers using the Reg D exemptions is that the securities issued do not have to be registered with the Securities and Exchange Commission.

Rule 506(c) allows an issuer to advertise and broadly solicit their offering while remaining compliant. As many issuers are hoping to raise awareness of their product or service in addition to funds during an ICO this may be an appealing exemption.

The freedom to advertise does come at a price. Issuers can only accept funds from accredited investors and the company must take steps to ensure that each investor is accredited. This means reviewing W-2s, tax returns, bank statements and/or other documents to verify the investor meets the standard. The filing of Form D is mandatory for Rule 506(c) offerings.

That means you can get your ICO out into the great American ether and, though it may sound like a lot of cash, a sizeable chunk of US citizens qualify as accredited investors. In 2016 there were 12,417,040 accredited investor households in the USA, making up just under 10 percent of all American households.

SEC Commissioner in favor of ICOs

SEC commissioner Hester Peirce, who is also nicknamed crypto mom has been lobbying for cryptocurrencies. On November 7th, 2018 she said that the US regulators are sending mixed signals. She stated:

“For example, our sister regulator, the Commodity Futures Trading Commission, has allowed the development of crypto-derivatives markets, but the SEC so far has not approved any application to list an exchange-traded product based on cryptocurrencies or crypto-derivatives trade on U.S. exchanges. Regulators have an unfortunate habit of allowing their own conservatism and their legitimate fear that they will be blamed when investments go wrong to curtail investors’ options.”

She thinks that there should be a different approach. In her own words:

“that allows investors—informed by good information about the relevant exchange-traded product and encouraged to exercise a healthy dose of skepticism—to choose whether or not to buy the product. I am working on convincing my colleagues.”

Awaiting SEC Approval, ICO Projects Are Turning To Form D System

The SEC authority at the US seems persnickety about the initial coin offering (ICO) and its marketplace. Meanwhile, the chairman Jay Clayton is …

The SEC authority at the US seems persnickety about the initial coin offering (ICO) and its marketplace. Meanwhile, the chairman Jay Clayton is focusing on the primary potential on the fundraising procedure for fraudulent activity.

He keeps cheering blockchain which seems to give its exclusive potential benefitting investors along with the financial services industry. It might seem surprised that the SEC grants approval to nearly 300 ICO projects currently fundraising in 2018.

In fact, according to the market analysis research. The firm demonstrates that the American regulator shows a green light to almost 287 worth projects in 2018.

LoopeHoles

There were many loopholes of sorts that show their revelation in 2019. Rather than their products promotion to the public. An organization is announcing an ICO that is only providing accredited investors by the SEC. And that will grab its chance for product investment.

The term accredited investor refers to a person having a net worth of least $1 million or person maintaining an income worth $200,000 or more than this. The firms holding worth $5 million or added assets will also be able to show their investment as accredited investors.

While only providing an investment product specifically to accredited investors, the person needs to file a Form D with the SEC. They will have to get clearance from particular regulators and they need not adhere to the sizeable rules.

So, this specifies the current situation where various projects not only related to ICO projects but also cryptocurrency are working with the wrong means and intends to ruin the peace that blockchain is trying to bring in the economy.

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Summary
Awaiting SEC Approval, ICO Projects Are Turning To Form D System
Article Name
Awaiting SEC Approval, ICO Projects Are Turning To Form D System
Description
The trick saying providing the products to licensing investors, firms can then be able to bypass the various regulatory stumbling blocks out there.
Author
Delma
Publisher Name
Coinpedia
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