Aames Financial Corp., a Los Angeles-based subprime mortgage lender, has announced that its board of directors is considering converting into a real estate investment trust.Upon converting to a REIT, the company would raise additional capital through a concurrent public offering of REIT common stock and its stockholders would become stockholders of the REIT. The company said its current capitalization includes three series of convertible preferred stock and common stock. The preferred stock has several characteristics that are different from those of the common stock, such as a liquidation preference equal to their stated value, a 6.5% dividend rate, and class voting rights, Aames said. In order to receive stockholder approval of the conversion and public offering, the company said it would need Specialty Finance Partners, its largest stockholder (which controlled over 90% of the votes eligible to vote on the proposed transaction as of Dec. 31), to approve the transactions and relinquish various rights and controls related to its ownership of preferred stock. The board has established a special committee of independent directors to evaluate the terms proposed by Specialty Finance Partners and to negotiate with Specialty Finance on behalf of the holders of the common stock.

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