Business Context and Reporting Period
This Form 8-K filing by Colony NorthStar, Inc. (not Digitalbridge Group, Inc.) was submitted on September 13, 2017. The report details a capital restructuring event involving the issuance of new preferred stock and the subsequent redemption of existing preferred stock series.
Key Financial Metrics and Transaction Details
- New Issuance: 11,000,000 shares of 7.125% Series J Cumulative Redeemable Perpetual Preferred Stock.
- Offering Price: $25.00 per share to the public; $24.2125 per share to underwriters.
- Estimated Net Proceeds: Approximately $265.7 million (base case) or $305.6 million (if the 30-day option for 1,650,000 additional shares is fully exercised).
- Redemption Price: $25.00 per share plus accrued and unpaid dividends for Series B and Series C Preferred Stock.
- Underwriters: Merrill Lynch, J.P. Morgan, Morgan Stanley, RBC Capital Markets, and UBS Securities.
Material Changes and Strategic Actions
The Company intends to use the net proceeds from the Series J Offering to refinance its capital structure. Specifically, the funds will be used to:
- Redeem a portion of the outstanding 8.25% Series B Cumulative Redeemable Perpetual Preferred Stock.
- Redeem all outstanding shares of the 8.875% Series C Cumulative Redeemable Perpetual Preferred Stock.
- Use any remaining proceeds for general corporate purposes.
Notice of redemption was delivered on September 13, 2017, with a scheduled Redemption Date of October 13, 2017. Upon redemption, the Series C Preferred Stock will be delisted from the New York Stock Exchange.
Outlook, Risks, and Contingencies
- Closing Contingency: The redemption of Series B and Series C shares is contingent upon the closing of the Series J Offering, expected on or about September 22, 2017.
- Dividend Cessation: Dividends on the redeemed shares will cease to accrue on the Redemption Date.
- Related Party Transactions: Certain affiliates of the underwriters hold shares of the Series B and Series C Preferred Stock that may be redeemed using the offering proceeds. Underwriters have also engaged in other commercial dealings with the Company.
- Financial Statements: The filing includes a computation of ratios of earnings to fixed charges and preferred dividends (Exhibit 12.1) but does not provide a full set of audited financial statements or specific revenue/profit metrics for the period.
Investor Verification Checklist
- Confirm the final closing date of the Series J Offering to ensure the redemption of Series B and C proceeds as scheduled.
- Verify the exact number of Series B shares redeemed versus the total outstanding to understand the remaining capital structure.
- Review the impact of the interest rate swap from 8.25%/8.875% (Series B/C) to 7.125% (Series J) on future fixed charge obligations.
- Check for any exercise of the 30-day underwriter option to purchase additional shares, which would increase net proceeds.
- Monitor the delisting of Series C Preferred Stock from the NYSE and the cessation of dividend accruals on October 13, 2017.