Market updates and sector developments

Angelo Gordon’s real estate investment trust, AG Mortgage Investment Trust (MITT), has offered to buy Western Asset Mortgage Capital Corporation (WMC) in a deal that would give the business an enterprise value of around US$300m. The proposed transaction comes shortly after WMC, which is managed by Franklin Templeton, announced an agreement to merge with Mavik Capital Management’s Terra Property Trust (TPT).

MITT has presented WMC’s board of directors with a proposal that gives its shares an implied price of US$9.88 apiece, comprising a stock consideration of US$8.90 per share and a cash consideration of US$0.98 per share. The prospective buyer says its proposal is “financially superior to the TPT deal”, highlighting that it represents an 18.2% premium on WMC’s closing share price of US$8.36 on 12 July and that, unlike the TPT transaction, it includes a cash consideration.

Under the terms of MITT’s proposal, WMC shareholders would maintain a “31% pro-forma ownership” of the combined company and Angelo Gordon would waive US$2.4m in management fees for the first year after closing. Additionally, MITT’s board would be expanded to include two additional members from WMC.

In other news…

ESMA updates SecReg Q&As

Following regulatory updates by the European Commission and UK Treasury this week (SCI 13 July), ESMA has now published a revised set of securitisation Q&As. They deal primarily with disclosure and templates in connection with the implementation of the CRA Regulation and the Securitisation Regulation.

ESMA says the purpose of the document is to promote common, uniform and consistent supervisory approaches and practices in the day-to-day application of the Securitisation Regulation by providing responses to questions asked by the public, financial market participants, competent authorities and other stakeholders. The authority intends to update it on a regular basis, in line with additional questions it receives through the Q&A tool on its website.