Certain funds and accounts managed by subsidiaries of Apollo Global Management, including subsidiaries of Athene Holding, provided a $500 million capital raise through a private senior secured loan agreement with MFA Financial. In addition, Athene and Barclays committed to a $1.65 billion non-mark-to-market term borrowing facility for MFA Financial.
Apollo and Athene have committed to purchase the lesser of 4.9% or $50 million of the MFA’s common stock in the open market over a 12-month period. Athene has committed to purchase a portion of MFA’s first securitization of non-QM mortgage loans, subject to certain pricing conditions. In connection with the transactions, Apollo and Athene will receive a warrant package to purchase shares of MFA’s common stock at varying prices over a five-year period.
Sidley Austin represented the affiliates of Apollo Global Management in providing the senior secured financing and committing to buy common shares of MFA Financial.
MFA expects that this capital raise and borrowing facility will enable it to exit the previously announced forbearance agreement entered into on June 1, 2020, and pay accumulated unpaid dividends on its series B and series C preferred stock issues.
The transactions are subject to the completion of definitive documentation relating to the term borrowing facility, completion of documentation relating to the exit from forbearance with MFA’s existing repurchase agreement counterparties, and other customary closing conditions.
“We are thrilled to enter into this strategic relationship with Apollo and Athene, which we think is a testament to MFA’s franchise and our dedicated team,” Craig Knutson, CEO and president of MFA, said. ”In addition to bolstering our balance sheet and providing MFA with additional flexibility, we view the capital raise as very much a strategic alliance. We believe that Apollo’s deep institutional relationships, together with Athene, will provide synergies that will assist us in our business. With approximately $1.65 billion of committed term non-mark-to-market financing for our whole loan portfolio, we can allow asset prices to continue to recover as we look to securitizations to further term out a portion of our financing. After a very difficult year so far, we are committed to continued efforts to generate future long-term value for our shareholders with Apollo and Athene as strategic and significant shareholders.”
“We are pleased to enter into this strategic relationship with MFA, which highlights the breadth and depth of the Apollo franchise as a capital solution provider across Athene and Apollo’s credit, private equity and real assets segments, and across the risk-return spectrum,” Neil Mehta, partner at Apollo, said.
“We believe MFA has a high-quality portfolio of residential credit, and with greater capital and an industry-leading financing structure, MFA will be well positioned to deliver long-term value,” Nancy De Liban, senior partner and head of consumer and residential credit at Apollo, said.
