RudyBalasko/iStock via Getty Images Thesis We recently did an extensive piece on the Two Harbors Investment Corp. ( TWO ) merger with CrossCountry Mortgage (to be referred to as 'CCM'), where we went through the merger timeline and the background to the transaction. In that article we focused on the impact on the preferred shares, and identified the Series C ( TWO.PR.C ) as the best way to take ad...
RudyBalasko/iStock via Getty Images Thesis We recently did an extensive piece on the Two Harbors Investment Corp. ( TWO ) merger with CrossCountry Mortgage (to be referred to as 'CCM'), where we went through the merger timeline and the background to the transaction. In that article we focused on the impact on the preferred shares, and identified the Series C ( TWO.PR.C ) as the best way to take advantage of the corporate action. We got a few questions regarding the impact on the bonds from TWO; hence, we are writing this piece for the holders of the Two Harbors Investment Corp. CAL 30 ( TWOD ). Recap of what is happening CrossCountry Mortgage (to be referred to as 'CCM') is a private mortgage lender out of Ohio who has agreed to purchase TWO: Two Harbors Investment (TWO) on Thursday announced a new definitive merger agreement with CrossCountry Mortgage, terminating its previously announced agreement with UWM Holdings ( UWMC ). Last week, Two said it received an unsolicited proposal for $10.70 per share in cash. The new proposal provides for the payment of the $25.4M termination fee that would be required under the UWMC agreement. Earlier this week, Two board's ad hoc committee said that CrossCountry Mortgage's unsolicited bid constitutes a "superior" proposal to the merger agreement it had previously reached with UWM Holdings. For the CCM merger to be complete, the TWO shareholders need to approve it (in the next month it will happen), and then regulatory approvals need to be obtained. That puts the completion date somewhere in the second half of 2026; thus, September 30, 2026, is a good guess as of now. This is important to remember because, from a legal standpoint, the TWOD bonds are not affected until the actual legal date when the merger becomes official. What does the TWOD prospectus say Firstly a quick recap of the bond characteristics: Outstanding notional: $100 mm. Coupon: 9.375%. Par value: $25/share. Call date: 5/15/2027. Maturity date: 8/15/2030. Distribu...