Two Harbors Investment Corp. has pushed its special meeting of stockholders to May 28 to give investors more time to vote on its proposed sale to an affiliate of CrossCountry Mortgage (CCM), as a competing proposal from UWM Holdings Corp. (UWMC) looms.
The New York-based, mortgage servicing rights-focused real estate investment trust said Tuesday that its board continues to unanimously recommend stockholders vote in favor of the all-cash transaction with CrossCountry Intermediate Holdco LLC. Companies usually adjourn special meetings either to establish a quorum or to secure enough shareholder votes.
Five days ago, CCM added a pro rata quarterly dividend payment for Two Harbors stockholders, providing up to $0.34 per share in incremental cash. A second-quarter dividend and a prorated third-quarter dividend would bring the total cash value to between $12.45 and $12.68 per share, the company said.
Holders of the company’s Series A, B and C preferred stock would be redeemed at $25 per share, plus any accumulated and unpaid dividends, following the closing.
Meanwhile, UWM has offered $12.50 per share with no cap or proration, although the Two Harbors board ultimately rejected the bid.
The special meeting, originally scheduled for May 19, will reconvene virtually at 10 a.m. on May 28. Proxies that have already been submitted will carry over to the reconvened meeting unless revoked. Stockholders who already voted in favor of the CrossCountry transaction do not need to take further action.
The deal remains subject to stockholder approval, as well as customary regulatory and closing conditions.
The adjournment follows an unsuccessful court challenge regarding the timing of the vote. A plaintiff sought a temporary restraining order in the U.S. District Court for the District of Maryland, arguing that alleged misstatements and omissions in the proxy statement required delaying Tuesday’s vote.
The court ruled from the bench in favor of Two Harbors, finding that the plaintiff had not shown a likelihood of success on the merits, and dismissed a related motion for a preliminary injunction as moot. According to a summary of the ruling provided by the company, the judge found the proxy disclosures were not materially misleading and sufficiently described the sale process.
Analysts at Keefe, Bruyette & Woods (KBW) released a note to investors on Tuesday in which it said that the “lack of votes needed suggests that CCM will likely need to raise its bid.”
“The most recent bid from UWMC is $12.50 cash with a default stock election. The most recent bid from CCM is $12, but shareholders would get a partial dividend for 3Q (the run rate quarterly dividend is $0.34),” the analysts wrote.
Flávia Furlan Nunes reported and wrote this article with drafting assistance from HousingWire Automation, an editorial tool that helps transform announcements and industry data into HousingWire-style news coverage.
