NovaStar Touts $150M Equity Commitment

NovaStar Financial Inc., a mortgage lender based in Kansas City, Mo., has announced an equity investment of $48.8 million by MassMutual Capital Partners LLC and funds managed by Jefferies Capital Partners IV LLC, as well as commitments under which a shareholder rights offering will raise an additional $101.2 million.The transactions, which represent the end of the exploration of strategic options by NovaStar's board of directors, were accompanied by a four-for-one reverse stock split of NovaStar's common stock. The equity investment came in the form of the purchase of $48.8 million of convertible preferred stock, and MassMutual and Jefferies committed to buy up to $101.2 million of any unsubscribed shares of the forthcoming shareholder rights offering for a similar series of preferred stock, NovaStar said. "These steps will strengthen our financial position and establish NovaStar as one of the leading independent lenders and portfolio managers in the nonconforming mortgage sector," said Scott Hartman, chairman and chief executive officer of NovaStar. The company can be found online at http://www.novastarmortgage.com.