Deerfield Capital Corp. (DFR) today announced that, in order to increase liquidity, reduce risk associated with our residential mortgage backed securities portfolio and principally focus our growth on our asset management business, we completed the following transactions between February 15, 2008 and March 10, 2008: sold agency RMBS with an amortized cost of $1.8 billion; sold AAA-rated non-agency RMBS with an amortized cost of $103.2 million; and reduced the net notional amount of interest rate swaps used to hedge the RMBS portfolio by approximately $2.0 billion. The net losses realized on these transactions were approximately $61.3 million.
As a result of the sales of substantially all of the AAA-rated non-agency RMBS and a large portion of the agency RMBS, we may not be in compliance with [the 75% asset] test at the end of the quarter. To remain qualified as a REIT, the Company will need to acquire additional qualifying assets or dispose of a significant portion of our nonqualifying assets by March 31, 2008, or within 30 days thereafter.
Deerfield dipped below the $1/share mark today, reflecting significant doubt that DFR can either 1) unload its nonqualifying assets at a reasonable price or 2) find financing to purchase additional qualifying assets (which could be Treasuries or RMBS).
DFR noted that it is "pursuing strategies" to maintain REIT qualification and "may explore alternative corporate structures in order to maximize value for our shareholders". For Deerfield, time is running out and cash is running short.
0 comments:
Post a Comment