Fannie Mae Prices Offerings of $2.25 billion of Common Stock and $2.25 billion of Mandatory Convertible Preferred Stock
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Jason Lobo
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202-752-1692
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Janis Smith
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202-752-6673
WASHINGTON, DC -- Fannie Mae (FNM/NYSE) today priced $2.25 billion, or 82 million shares, of a new offering of its common stock (CUSIP 313586109) at $27.50 per share.
The company also announced that it priced $2.25 billion, or 45 million shares, of 8.75 percent Non-Cumulative Mandatory Convertible Preferred Stock, Series 2008-1 (CUSIP 313586745).
The Series 2008-1 Preferred Stock has a stated value and liquidation preference of $50 per share, and will pay quarterly non-cumulative cash dividends, when and if declared by the Board of Directors, at a rate of 8.75 percent per annum on the stated value. Each share of the Series 2008-1 Preferred Stock will automatically convert on May 13, 2011, into between 1.5408 shares and 1.8182 shares of Fannie Mae common stock. Also, at any time at the election of the holder, each share of the Series 2008-1 Preferred Stock may be converted into 1.5408 shares of Fannie Mae common stock. The conversion rates for the Series 2008-1 Preferred Stock will be subject to anti-dilution adjustments in certain circumstances.
"Investor demand for these offerings was very strong, which we believe reflects investor confidence in the long-term value of our business and our leading market position," said David Benson, Senior Vice President and Treasurer of Fannie Mae.
Fannie Mae has granted the underwriters for the offerings a 30-day option to purchase up to 12.3 million additional shares of common stock and a 30-day option to purchase up to an additional 6.75 million shares of the Series 2008-1 Preferred Stock.
Both offerings are expected to close on May 14, 2008, subject to satisfaction of customary closing conditions. As previously announced, these offerings will be followed in the very near future by an offering of non-cumulative, non-convertible preferred stock.
Net proceeds of the offerings will be used for general corporate purposes, including enabling the company to maintain a strong, conservative balance sheet, enhance long-term shareholder value, and provide stability to the secondary mortgage market.
Lehman Brothers Inc., J.P. Morgan Securities Inc. and Citigroup Global Markets Inc. are joint book-running managers for the common stock offering, with Goldman, Sachs & Co. and Morgan Stanley acting as co-managers. J.P. Morgan Securities Inc., Lehman Brothers Inc. and Banc of America Securities LLC are joint book-running managers on the Series 2008-1 Preferred Stock offering, with Goldman, Sachs & Co. and Merrill Lynch acting as co-managers. Lehman Brothers Inc. and J.P. Morgan Securities Inc. acted as global coordinators in both offerings.
Copies of the Offering Circulars will be available on Fannie Mae's website and can be obtained from the global coordinators at the following addresses:
- Lehman Brothers Inc., c/o Broadridge, Integrated Distribution Services, 1144 Long Island Avenue, Edgewood, NY 11717; fax (631) 254-7140, or email: [email protected].
- J.P. Morgan Securities Inc., 4 Chase Metrotech Center, CS Level, Brooklyn, NY 11245, Attention: Chase Distribution & Support Service Northeast Statement Processing Phone: (718) 242-8002.
A supplemental listing application will be made to list the additional common stock on the New York Stock Exchange. Application will be made to list the Series 2008-1 Preferred Stock on the New York Stock Exchange under the symbol "FNA."
Fannie Mae is a shareholder-owned company with a public mission. We exist to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market. Fannie Mae has a federal charter and operates in America's secondary mortgage market to ensure that mortgage bankers and other lenders have enough funds to lend to home buyers at low rates. In 2008, we mark our 70th year of service to America's housing market. Our job is to help to those who house America.Certain statements in this press release, including those relating to plans to raise capital, as well as planned use of the net proceeds; and future business activities, may be considered forward-looking statements within the meaning of the federal securities laws. Although Fannie Mae believes that the expectations set forth in these statements are based upon reasonable assumptions, Fannie Mae's future plans, operations and its actual performance may differ materially from what is indicated in any forward-looking statements. Additional information that could cause actual results to differ materially from these statements are detailed in Fannie Mae's quarterly report on Form 10-Q for the period ended March 31, 2008, and its annual report on Form 10-K for the year ended December 31, 2007, including the "Risk Factors" section in these reports, and in its reports on Form 8-K.
All forms Fannie Mae filed with the SEC can also be obtained on the company's web site at www.fanniemae.com/portal/about-fm/investor-relations/index.html.
This press release does not constitute an offer to sell or the solicitation of an offer to buy securities of Fannie Mae. Nothing in this press release constitutes advice on the merits of buying or selling a particular investment.
You should not deal in securities unless you understand their nature and the extent of your exposure to risk. You should be satisfied that they are suitable for you in the light of your circumstances and financial position. If you are in any doubt, you should consult an appropriately qualified financial advisor.