Velocity Financial Announces Conversion of Series A Preferred Stock

Rhea-AI Summary

Velocity Financial, Inc. (NYSE: VEL) has voluntarily converted all 45,000 shares of Series A Convertible Preferred Stock into 11,688,310 shares of common stock. This conversion moves the $90 million liquidation preference value from mezzanine equity to permanent stockholders’ equity. As of June 30, 2021, stockholders’ equity would have increased from $233 million to $323 million had the conversion occurred. CFO Mark Szczepaniak stated that this successful conversion removes uncertainties regarding liquidation preferences and enhances the company's capital structure.

Positive

• Removal of $90 million liquidation preference enhances financial clarity.
• Increased stockholders’ equity from $233 million to $323 million strengthens balance sheet.

Negative

• None.

WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)-- Velocity Financial, Inc. (NYSE: VEL), ("Velocity" or the "Company"), a leading provider of small balance investor loans, today announced the voluntary conversion of all 45,000 outstanding shares of the Company’s Series A Convertible Preferred Stock into 11,688,310 shares of Velocity common stock.

As a result of the conversion, the $90 million liquidation preference value of the Series A Convertible Preferred Stock previously reflected as mezzanine equity in our statements of financial condition, has been reclassified to permanent stockholders’ equity. Following the conversion, the Company will no longer have any Series A Convertible Preferred Stock outstanding or any shares outstanding with a liquidation preference.

Velocity’s stockholders’ equity as of June 30, 2021, was $233 million. For illustration purposes, had the conversion occurred as of June 30, 2021, stockholders’ equity would have been $323 million.

"Successful completion of the Series A Convertible Preferred Stock conversion removes uncertainties around the liquidation preference related to the preferred stock and further strengthens the Company’s capital structure," said Mark Szczepaniak, Chief Financial Officer. "The opportunity to convert our preferred stock results from Velocity’s strong financial performance and the momentum we have developed in growing our origination platform."

About Velocity Financial, Inc.

Based in Westlake Village, California, Velocity is a vertically integrated real estate finance company that originates and manages investor loans secured by 1-4 unit residential rental and small commercial properties. Velocity originates loans nationwide across an extensive network of independent mortgage brokers it has built and refined over 16 years. For additional information, please visit the Company’s investor relations website at www.velfinance.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211008005069/en/

Investors and Media:

Chris Oltmann

(818) 532-3708

Source: Velocity Financial, Inc.

FAQ

What are the implications of Velocity Financial's stock conversion?

The conversion of Series A Convertible Preferred Stock to common stock removes uncertainties around liquidation preferences and strengthens the capital structure.

What is the current status of Velocity Financial's Series A Convertible Preferred Stock?

Velocity Financial has successfully converted all 45,000 shares of Series A Convertible Preferred Stock into common stock.

How much did Velocity Financial's stockholders' equity increase after the conversion?

Had the conversion occurred as of June 30, 2021, stockholders' equity would have increased from $233 million to $323 million.

What does the conversion mean for investors in Velocity Financial?

Investors can expect improved financial clarity and reduced liabilities related to preferred stock.

Who made the announcement about the stock conversion?

The announcement was made by Velocity Financial, Inc. and highlighted by CFO Mark Szczepaniak.