NEWPORT BEACH, Calif.,
Oct. 8, 2014 /PRNewswire/ -- CV
Holdings, Inc. (Other OTC: CVHL) today reported that it has entered
into a joint venture ("JV") with a prominent real estate private
equity firm (the "Investor"), pursuant to which the JV will manage
an initial $50MM of capital for the purpose of acquiring portfolios
of non performing residential loans (NPLs), which have been the
core business of the Company. The JV is a non-discretionary
commitment to be funded on a deal by deal basis as NPL transactions
are acquired.
In connection with the JV, the Company also issued, in a private
placement, shares of a newly created Senior Preferred Stock (the
"Preferred") of the Company to the Investor for the purpose of
funding the Company's co-invest requirements under the JV.
The Investor has agreed to purchase up to $7,500,000 of Preferred, which will be issued in
conjunction with the co-investment obligations of the Company under
the JV, and also has the option to purchase an additional
$7,500,000 of Preferred subject to
certain terms and conditions. The Company is obligated to
co-invest up to 10% of every NPL deal in the JV and is required to
use the proceeds from the Preferred issuances, if drawn, to fulfill
that commitment. The issuances and funding of the Preferred will
occur concurrently with the closings of NPL deals in the JV, both
of which will be subject to the approval by the Investor. In
addition, the Company is issuing to the Investor warrants to
purchase up to 4,148,532 shares of Common Stock of the Company (the
"Warrants"), only a portion of which will be exercisable upon
issuance, with the remainder subject to vesting as the Preferred is
funded and in certain other circumstances. The warrants were
nominally priced with a strike price of $0.01 per share, as they are an equity kicker for
the Preferred investment.
The Preferred has the option to pay or accrue a 10% dividend and
will be optionally redeemable by the Company under certain
circumstances. In addition, the Investor will have the right
to demand a mandatory redemption starting with the third
anniversary, depending on the circumstances. The Investor will have
certain corporate governance rights, depending on the level of the
Preferred funded, including a board seat and approval rights over
major corporate decisions.
The Company recently issued an initial $500,000 of Preferred in conjunction with a NPL
investment by the JV that was closed on September 30, 2014. Future issuances of the
Preferred require Investor approval, and no assurances can be given
that the Investor will purchase the Preferred or that a specific
NPL deal will be approved by the Investor.
Although the Preferred has a liquidation preference that is
senior to the holders of Common Stock, the Preferred is not
convertible into Common Stock, and therefore itself does not dilute
the existing voting power or ownership of the holders of Common
Stock. Nevertheless, the Warrants being issued in conjunction
with the Preferred will dilute the common stock, as described
below. On a pro forma basis, assuming the full vesting
and exercise of the Warrants, the Company's outstanding shares
would increase from the currently fully diluted 47,708,116 to
51,856,648. This number is subject to further change to
reflect any applicable additional shares issuable to the Investor
under the anti-dilution provisions of the Warrant.
About CV Holdings, Inc.
We have two business units, with our legacy business being as a
commercial real estate, specialty finance company primarily focused
on managing a diversified portfolio of commercial real
estate-related loans and securities and our current business in
commercial real estate and residential NPLs.
Our Common Stock is currently quoted on the OTC Markets Group,
or OTC Markets. While not a requirement, the OTC Markets
Group encourages companies having their securities quoted thereon
to provide adequate current information in accordance with its
disclosure guidelines. We will evaluate the need to issue
press releases containing information similar to such information
disclosed herein. We do not undertake any obligation nor do
we give any assurance that we will provide timely periodic
disclosures or any public disclosure at all. The information
provided in this press release is not complete and does not purport
to be complete.
We elected to qualify as a real estate investment trust, or
REIT, for U. S. federal income tax purposes commencing with the
taxable year ended December 31, 2005.
We intend to continue to qualify as a REIT. As a REIT, we generally
will not be subject to U. S. federal income tax on that portion of
our income that we distribute to our stockholders for so long as we
continue to qualify as a REIT, including distributing at least 90%
of our annual "REIT taxable income" to our stockholders. We conduct
our operations so as to not be or become regulated as an investment
company under the Investment Company Act of 1940. The Company has
not had federal taxable income since 2007 and does not expect any
federal taxable income in the foreseeable future.
Forward-Looking Information and Other Information
This press release contains forward-looking statements based
upon the Company's beliefs, assumptions and expectations of its
future performance, taking into account all information currently
available. These beliefs, assumptions and expectations can change
as a result of many possible events or factors, not all of which
are known to the Company or are within its control. If a change
occurs, the Company's business, financial condition, liquidity and
results of operations may vary materially from those expressed in
its forward-looking statements.
The factors that could cause actual results to vary from the
Company's forward-looking statements include: the success of the
JV; the availability of attractive NPL investments; the subsequent
investments by the Investor; the U.S. general economy; the
Company's liquidity and ability to continue to cover its operating
cash requirements; the Company's future operating results; its
business operations and prospects; availability, terms and
deployment of short-term and long-term capital; availability of
qualified employees; changes in interest rates; adverse development
in the debt securities, credit and capital markets, adverse
developments in the commercial finance and real estate markets;
performance and financial condition of borrowers and corporate
customers; any future litigation that may arise; the ultimate
resolution of the Company's numerous defaulted loans; the
performance of the Company's joint venture investments; the ability
to continue as a going concern. The Company undertakes no
obligation to publicly update or revise any of the forward-looking
statements.
SOURCE CV Holdings, Inc.