Business Context and Reporting Period
This Form 8-K is filed by ZAIS Financial Corp. (not Ready Capital Corp as indicated in metadata) for the reporting date of May 26, 2016. The filing details the completion of a significant asset sale and the termination of a related financing agreement, which serves as a condition precedent to a previously announced merger with Sutherland Asset Management Corporation.
Key Financial Metrics
- Asset Sale Proceeds: $362.0 million received from the sale of seasoned, re-performing mortgage loans.
- Unpaid Principal Balance (UPB) of Sold Assets: $430.7 million.
- Debt Repayment: $267.2 million of sale proceeds used to repay the outstanding balance under a master repurchase agreement with Citibank N.A.
- Debt Termination: The Master Repurchase Agreement dated May 30, 2013, was terminated on May 26, 2016.
Material Changes
The Company completed the sale of specific mortgage loans to Citigroup Global Markets Realty Corporation (CGMRC). This transaction resulted in the immediate repayment and termination of the financing facility used to acquire those loans. The sale price was calculated based on a percentage of the UPB, accrued interest, and recoverable servicing advances. This action was a mandatory condition to proceed with the merger with Sutherland Asset Management Corporation.
Outlook, Risks, and Management Commentary
The completion of this loan sale clears a path for the proposed merger with Sutherland Asset Management Corporation. The Company has filed a registration statement on Form S-4, which includes a preliminary joint proxy statement/prospectus. However, the SEC has not yet declared the registration statement effective, and it remains subject to significant revisions. The filing explicitly states that it does not constitute an offer to sell securities or a solicitation of votes. Investors are urged to review the definitive joint proxy statement/prospectus before making investment decisions.
Investor Verification Checklist
- Verify the status of the Form S-4 registration statement and the definitive joint proxy statement/prospectus regarding the merger with Sutherland Asset Management Corporation.
- Confirm the final terms of the merger agreement and any potential revisions to the S-4 filing.
- Review the relationship and ongoing fees between ZAIS Financial Corp. and affiliates of CGMRC, including financing and equity research services.
- Check for any subsequent filings regarding the effectiveness of the merger or changes to the transaction structure.