NovaStar Financial Inc., Kansas City, Mo., has completed its recapitalization program as its Series C Cumulative Redeemable Preferred Stock has been exchanged for nearly 44 million newly issued shares of its common stock and $1.6 million in cash.
One week ago, the other portion of the plan, the exchange of Series D1 Mandatory Convertible Preferred Stock for 37 million newly issued shares of common stock and $1.4 million in cash was completed.
The exchange eliminates NovaStar's obligation to pay dividends of $25 million on the Series C stock and $35 million on the Series D stock.
As of mid-morning Tuesday, NovaStar's common stock, thinly traded on the pink sheets, was at $0.36 per share, down $0.06 on the day.
Lance Anderson, chief executive, said, "by completing this transaction, we have simplified our capital structure and eliminated a significant demand on NovaStar's cash. This is an important step in positioning the company for future growth."
Once a high-flyer in the subprime mortgage business, today NovaStar manages a portfolio of nonconforming residential mortgage securities and is the majority owner of three companies: appraisal management company StreetLinks LLC, mortgage technology company Corvisa LLC, and Advent Financial Services LLC, which provides access to banking products to low and moderate income individuals.
