Anthracite Capital exchanges senior unsecured notes for new notes

By Caroline Salls

Pittsburgh, Nov. 3 - Anthracite Capital, Inc. has entered into a notes exchange agreement with senior unsecured noteholders Kodiak CDO I, Ltd., Kodiak CDO II, Ltd., Attentus CDO III, Ltd. and Taberna Preferred Funding IX, Ltd., according to an 8-K filed with the Securities and Exchange Commission.

Under the agreement, Anthracite agreed to issue new unsecured senior notes in exchange for $64.5 million of the existing notes.

Specifically, the company said it issued $43.5 million principal amount of new unsecured senior notes in exchange for $36.25 million principal amount of its 7.22% senior notes due 2016, $7.5 million principal amount of new unsecured senior notes in exchange for $6.25 million principal amount of its 7.20% senior notes due 2016 and $26.4 million principal amount of new unsecured senior notes in exchange for $22 million principal amount of its 7.772%-to-floating rate senior notes due 2017.

Under the related indentures, the new notes bear a fixed interest rate of 1.25% per year until the earlier of Oct. 30, 2013 and the date on which the outstanding principal amount of senior secured loans under the company's credit facilities with Bank of America, Deutsche Bank and Morgan Stanley is less than or equal to $4 million.

After the modification period, the new notes bear interest at the same rates as the securities for which they were exchanged.

During the modification period, the company will be subject to limitations on its ability to pay cash dividends on shares of its common stock or preferred stock or redeem, purchase or acquire any equity interests and to incur or issue new debt other than trade debt or similar debt incurred in the ordinary course of business and debt in exchange for or to provide the funds necessary to repurchase, redeem, refinance or satisfy the company's existing secured and senior unsecured debt.

In addition, during the modification period, the default interest payment cure period is three days.

According to the 8-K, Anthracite did not make interest payments due Oct. 30 on its outstanding $13.75 million of 7.22% senior notes due 2016, its outstanding $15 million of 7.772%-to-floating rate senior notes due 2017 and its outstanding $37.5 million of 8.1275%-to-floating rate senior notes due 2017.

The company did make the interest payments originally due Sept. 30 on the 7.20% senior notes due 2016.

In connection with the exchange of the 7.20% notes, the Sept. 30 interest payment was satisfied by payment at the new lower rate of 1.25% per year on the increased principal amount.

Anthracite Capital is a New York specialty finance company focused on investments in high-yield commercial real estate loans and related securities.

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