Business Context and Reporting Period
This Form 8-K is filed by Colony NorthStar, Inc. (not Digitalbridge Group, Inc.) on May 24, 2017. The report details a significant capital structure event involving an underwritten public offering of preferred stock and the subsequent redemption of existing preferred stock series.
Key Financial Metrics and Transaction Details
- New Issuance: The Company agreed to sell 13,800,000 shares of 7.15% Series I Cumulative Redeemable Perpetual Preferred Stock.
- Offering Price: $25.00 per share to the public; $24.2125 per share to underwriters.
- Net Proceeds: Estimated at approximately $333.5 million after deducting underwriting discounts, commissions, and offering expenses.
- Use of Proceeds: Primarily to redeem all outstanding 8.75% Series A and 8.50% Series F Preferred Stock, with remaining funds for general corporate purposes.
- Redemption Price: $25.00 per share plus accrued and unpaid dividends for both Series A and Series F.
Material Changes and Strategic Actions
The filing announces a refinancing strategy to replace higher-cost debt with lower-cost capital. The Company intends to redeem its 8.75% Series A and 8.50% Series F Preferred Stock using proceeds from the new 7.15% Series I issuance. This action reduces the Company's weighted average dividend rate on preferred equity. The redemption is contingent upon the closing of the new offering, expected on or about June 5, 2017.
Outlook, Risks, and Contingencies
- Closing Conditions: The transaction is subject to customary closing conditions outlined in the Underwriting Agreement.
- Redemption Date: Set for June 23, 2017. Dividends on the redeemed Series A and Series F will cease accruing on this date.
- Underwriter Conflicts: Certain affiliates of the underwriters own shares of the Series A and Series F stock to be redeemed and have engaged in other commercial dealings with the Company.
- Delisting: Upon redemption, the Series A and Series F stocks will be delisted from the New York Stock Exchange.
Investor Verification Checklist
- Verify the final closing date of the Series I Offering (expected June 5, 2017) to confirm the redemption contingency is met.
- Confirm the exact amount of accrued and unpaid dividends payable on the Series A and Series F redemptions as of the Redemption Date.
- Review the final net proceeds calculation to ensure the $333.5 million estimate holds after all expenses.
- Monitor the delisting process for Series A and Series F on the NYSE following the June 23, 2017 redemption.