| Item 1.01. | Entry into a Material Definitive Agreement. |
The information set forth in Item 2.03 of this Current Report on Form 8-K is hereby incorporated by reference into this Item 1.01.
| Item 2.03. | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
On August 19, 2024, Chimera Investment Corporation (the “Company”) completed the issuance and sale of $74.75 million aggregate principal amount of its 9.250% Senior Notes due 2029 (the “Notes”), in a public offering pursuant to the Company’s registration statement on Form S-3 (File No. 333-261462) (the “Registration Statement”) and a related prospectus, as supplemented by a prospectus supplement dated August 12, 2024, filed with the Securities Exchange Commission pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the “Securities Act”). The Notes were sold pursuant to the Underwriting Agreement filed as Exhibit 1.1 to the Company’s Current Report on Form 8-K filed on August 13, 2024.
The Notes were issued at 100% of the principal amount, bear interest at a rate equal to 9.250% per year, payable in cash quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, beginning on November 15, 2024, and are expected to mature August 15, 2029 (the “Maturity Date”), unless earlier redeemed. The Company may redeem the Notes in whole or in part at any time or from time to time at the Company’s option on or after August 15, 2026, upon not less than 30 days written notice to holders prior to the redemption date, at a redemption price equal to 100% of the outstanding principal amount of the Notes to be redeemed plus accrued and unpaid interest to, but excluding, the redemption date, as described in greater detail in the Indenture (as defined below).
The Notes were issued under the indenture, dated April 13, 2020 (the “Base Indenture”), as supplemented by the third supplemental indenture, dated August 19, 2024 (the “Third Supplemental Indenture,” and together with the Base Indenture, the “Indenture”), by and between the Company and Wilmington Trust, National Association, as trustee. The Notes will be the Company’s senior unsecured obligations and will rank senior in right of payment to any future indebtedness that is expressly subordinated in right of payment to the Notes, equal in right of payment to the Company’s existing and future unsecured indebtedness that is not so subordinated, effectively junior to any existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness and structurally junior to all existing and future indebtedness and any preferred equity of the Company’s subsidiaries as well as to any of the Company’s existing or future indebtedness that may be guaranteed by any of the Company’s subsidiaries (to the extent of any such guarantee).
The Indenture contains customary events of default. If there is an event of default under the Notes, the principal amount of the Notes, plus accrued and unpaid interest (including additional interest, if any), may be declared immediately due and payable, subject to certain conditions set forth in the Indenture. These amounts automatically become due and payable in the case of certain types of bankruptcy or insolvency events of default involving the Company.
The net proceeds to the Company from the sale of the Notes, after deducting the Underwriters’ discounts and commissions and estimated offering expenses, are approximately $71.9 million. The Company intends to use the net proceeds from this offering to finance the acquisition of mortgage assets including residential mortgage loans, non-Agency RMBS, Agency RMBS, Agency CMBS and other targeted assets, and for other general corporate purposes such as repayment of outstanding indebtedness or to pay down other liabilities, working capital and for liquidity needs.
Copies of the Base Indenture, the Third Supplemental Indenture and the form of the Notes are attached hereto as Exhibit 4.1, Exhibit 4.2 and Exhibit 4.3, respectively, and are incorporated herein by reference. The foregoing summaries do not purport to be complete and are qualified in their entirety by reference to the Base Indenture, the Third Supplemental Indenture and the form of the Notes. In connection with the registration of the Notes under the Securities Act, the legal opinions of Venable LLP and Hunton Andrews Kurth LLP relating to the legality of the Notes are attached as Exhibit 5.1 and Exhibit 5.2, respectively, to this Current Report on Form 8-K.
