NEW YORK--(BUSINESS WIRE)--Chimera Investment Corporation (NYSE: CIM) today announced that it has commenced an underwritten public offering of $250.0 million aggregate principal amount of convertible senior notes due 2023 (the “Notes”), subject to market and other conditions. The Company expects to grant the underwriter a 13-day option to purchase up to an additional $37.5 million aggregate principal amount of the Notes to cover over-allotments. The Notes will be senior unsecured obligations of the Company.

In connection with the offering of the Notes, the Company expects to enter into one or more privately negotiated capped call transactions with the underwriter, and/or its affiliates or other financial institutions (the “option counterparties”). The capped call transactions are expected generally to reduce potential dilution to the Company’s common stock (the “Common Stock”) upon any conversion of Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to a cap. If the underwriter exercises its over-allotment option, the Company expects to enter into additional capped call transactions with the option counterparties.

The Company intends to use a portion of the net proceeds of the offering to pay the cost of the capped call transactions and the remainder to finance the acquisition of mortgage assets including residential mortgage loans, non-Agency RMBS, Agency RMBS, Agency and non-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.

In connection with establishing their initial hedges of the capped call transactions, the option counterparties or their respective affiliates expect to enter into various derivative transactions with respect to the Common Stock concurrently with or shortly after the pricing of the Notes. This activity could increase (or reduce the size of any decrease in) the market price of the Common Stock or the Notes at that time.

In addition, the option counterparties or their respective affiliates may modify their hedge positions by entering into or unwinding various derivatives with respect to the Common Stock and/or purchasing or selling the Common Stock or other securities of the Company in secondary market transactions following the pricing of the Notes and prior to the maturity of the Notes (and are likely to do so during any observation period related to a conversion of Notes). This activity could also cause or avoid an increase or a decrease in the market price of the Common Stock or the Notes, which could affect the ability of holders to convert the Notes and, to the extent the activity occurs during any observation period related to a conversion of Notes, it could affect the number of shares of Common Stock and value of the consideration that holders will receive upon conversion of the Notes.

About Chimera Investment Corporation

We are a publicly traded REIT that is primarily engaged in the business of investing directly or indirectly through our subsidiaries, on a leveraged basis, in a diversified portfolio of real estate assets, including mortgage loans, Agency RMBS, Non-Agency RMBS, Agency CMBS, and other real estate assets.