Farmer Mac to Redeem Outstanding Series C Preferred Stock
Farmer Mac (NYSE: AGM) announced plans to redeem all 3,000,000 shares of its 6.000% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C. The redemption price is set at $25.00 per share, plus any declared and unpaid dividends until the redemption date of July 18, 2024. Post-redemption, dividends will cease to accrue on these shares. The shares are held in book-entry form through The Depository Trust Company (DTC), and the redemption process will follow DTC's procedures. Equiniti Trust Company will act as the transfer agent for the redemption.
- Farmer Mac will redeem all 3,000,000 shares of Series C Preferred Stock at $25.00 per share, providing liquidity to shareholders.
- The redemption includes any declared and unpaid dividends, ensuring that shareholders receive their due returns.
- This move may improve Farmer Mac's capital structure by eliminating the fixed dividend obligation on the Series C Preferred Stock.
- Post-July 18, 2024, dividends on the Series C Preferred Stock will cease to accrue, impacting income for current holders.
- Redeeming the preferred stock could indicate Farmer Mac's strategy to manage financial obligations, potentially signaling liquidity management challenges.
Insights
Farmer Mac's decision to redeem its 6.000% Fixed-to-Floating Rate Non-Cumulative Preferred Stock, Series C, can have some notable implications for both the company and its investors. From a financial perspective, redeeming preferred stock often indicates the company's intention to optimize its capital structure. By redeeming Series C Preferred Stock, Farmer Mac is likely aiming to reduce the cost of capital, especially if current market rates are lower than the 6.000% fixed rate they were paying. This move can be seen as a positive development for the company's overall financial health.
For investors holding Series C Preferred Stock, the redemption means they will receive $25.00 per share plus any declared and unpaid dividends through and including the redemption date. While this provides a clear exit strategy for investors, it might also mean a search for new investment opportunities, particularly if the fixed-to-floating rate feature was attractive to them.
Another point to consider is the impact on common stockholders. Redeeming preferred stock might benefit common stockholders, as it could lower Farmer Mac's overall dividend obligations, potentially freeing up more capital for reinvestment or distribution to common shareholders. This move might improve shareholder value in the long term.
However, it is essential for retail investors to assess the company's future plans and the overall economic environment. Redemption of preferred stock signals confidence in the company's liquidity, but it is vital to keep an eye on how Farmer Mac plans to use the freed-up capital and if they announce any new issuances or buybacks that could affect the stock's price.
The decision to redeem Series C Preferred Stock also occurs within a broader market context. Preferred stocks like Series C are often attractive to income-focused investors due to their fixed dividend payments. With the redemption, these investors will likely reassess their portfolios. The timing of this redemption could suggest strategic positioning by Farmer Mac, possibly anticipating changes in interest rates or market conditions that make the current rate less favorable.
This move can influence the market perception of Farmer Mac's financial strategies and operational stability. Companies that redeem preferred stocks typically do so when they have a strong liquidity position and forecast lower future borrowing costs. Investors might interpret this as a positive indicator of the company's financial health and strategic foresight, potentially boosting confidence in the company's management.
In the short term, the redemption may have limited impact on the stock price of AGM due to the specific nature of preferred stockholders. However, in the long term, the effective use of redeemed capital can drive growth and potentially enhance shareholder value, making the stock more attractive to a broader range of investors.
Farmer Mac will redeem the Series C Preferred Stock for a redemption price of
All shares of Series C Preferred Stock are issued in book-entry form only through the facilities of The Depository Trust Company ("DTC"). Accordingly, the redemption of the Series C Preferred Stock, including payment of the redemption price, will be completed according to DTC's procedures. A notice of redemption will be given today to the holders of Series C Preferred Stock. Payment to DTC for the Series C Preferred Stock so redeemed will be made by Equiniti Trust Company ("Equiniti"), as transfer agent. Equiniti's address is as follows:
Equiniti Trust Company, LLC
55 Challenger Road, Suite # 200
Attn: Reorganization Department
Forward-Looking Statements
In addition to historical information, this release includes forward-looking statements that reflect management's current expectations for the redemption, including the redemption date. Management's expectations for Farmer Mac's future necessarily involve a number of assumptions and estimates and the evaluation of risks and uncertainties. You should pay particular attention to the risk factors discussed in Farmer Mac's Annual Report on Form 10-K for the year ended December 31, 2023, as filed with the SEC on February 23, 2024, and Farmer Mac's Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, as filed with the SEC on May 6, 2024. In light of these potential risks and uncertainties, no undue reliance should be placed on any forward-looking statements expressed in this release. The forward-looking statements contained in this release represent management's expectations as of the date of this release. Farmer Mac undertakes no obligation to release publicly the results of revisions to any forward-looking statements included in this release to reflect new information or any future events or circumstances, except as the SEC otherwise requires.
About Farmer Mac
Farmer Mac is driven by its mission to increase the accessibility of financing for American agriculture and rural infrastructure. As a secondary market provider for our nation's agricultural and rural infrastructure credit, we provide financial solutions to a broad spectrum of customers supporting rural America, including agricultural lenders, agribusinesses, and rural electric cooperatives. We are uniquely positioned to facilitate competitive access to financing that fuels growth, innovation, and prosperity in America's rural and agricultural communities. More information about Farmer Mac is available on our website at www.farmermac.com.
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SOURCE Farmer Mac
FAQ
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