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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 22, 1999.
REGISTRATION NO. 333-75473
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
--------------------------
ANTHRACITE CAPITAL, INC.
(Exact name of Registrant as specified in its charter)
MARYLAND
(State or other jurisdiction of
incorporation or organization)
13-3978906
(I.R.S. Employer Identification No.)
--------------------------
345 PARK AVENUE, 29TH FLOOR
NEW YORK, NY 10154
(212) 754-5560
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of each Registrant's Principal Executive Offices)
--------------------------
HUGH R. FRATER
PRESIDENT
ANTHRACITE CAPITAL, INC.
345 PARK AVENUE, 29TH FLOOR
NEW YORK, NY 10154
(212) 754-5560
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPY TO:
VINCENT J. PISANO, ESQ.
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 735-3000
--------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
PROSPECTUS
$200,000,000
ANTHRACITE CAPITAL, INC.
COMMON STOCK, PREFERRED STOCK, DEBT SECURITIES AND WARRANTS
------------------
Anthracite Capital, Inc. may sell to the public:
- common stock
- preferred stock
- debt securities
- warrants to purchase common stock
- warrants to purchase preferred stock
REFERENCES IN THIS PROSPECTUS TO "ANTHRACITE," "WE," "US," OR "OUR" REFER TO
ANTHRACITE CAPITAL, INC. PRIOR TO JANUARY 1998, OUR NAME WAS ANTHRACITE MORTGAGE
CAPITAL, INC.
WE URGE YOU TO READ THIS PROSPECTUS AND THE ACCOMPANYING PROSPECTUS
SUPPLEMENT, WHICH WILL DESCRIBE THE SPECIFIC TERMS OF THE COMMON STOCK, THE
PREFERRED STOCK, THE DEBT SECURITIES AND THE WARRANTS, CAREFULLY BEFORE YOU MAKE
YOUR INVESTMENT DECISION.
------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS OR THE ACCOMPANYING PROSPECTUS SUPPLEMENT IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
THIS PROSPECTUS MAY NOT BE USED TO SELL SECURITIES UNLESS ACCOMPANIED BY A
PROSPECTUS SUPPLEMENT.
The date of this prospectus is , 1999
<PAGE>
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission using a "shelf" registration process. Under
this shelf process, we may sell any combination of the securities described in
this prospectus in one of more offerings up to a total dollar amount of proceeds
of $200,000,000. This prospectus provides you with a general description of the
securities we may offer. Each time we sell securities, we will provide a
prospectus supplement that will contain specific information about the terms of
that offering. The prospectus supplement may also add, update or change
information contained in this prospectus. You should read both this prospectus
and any prospectus supplement together with additional information described
under the heading "Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements, and other information with the SEC. Such
reports, proxy statements, and other information concerning us can be read and
copied at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the
Public Reference Room. The SEC maintains an internet site at http://www.sec.gov
that contains reports, proxy and information statements and other information
regarding issuers that file electronically with the SEC, including ours. Our
common stock is listed and traded on the New York Stock Exchange. These reports,
proxy statements and other information are also available for inspection at the
offices of the NYSE, 20 Broad Street, New York, New York 10005.
This prospectus is part of a registration statement filed with the SEC by
us. The full registration statement can be obtained from the SEC as indicated
above, or from us.
The SEC allows us to "incorporate by reference" the information we file with
the SEC. This permits us to disclose important information to you by referencing
these filed documents. Any information referenced this way is considered part of
this prospectus, and any information filed with the SEC subsequent to this
prospectus will automatically be deemed to update and supersede this
information. We incorporate by reference the following documents which have been
filed with the SEC:
- Annual Report on Form 10-K for the fiscal year ended December 31, 1998,
- Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31,
1999 and June 30, 1999, and
- the description of our common stock contained in our registration
statement on Form 8-A dated March 5, 1998.
We incorporate by reference the documents listed above and any future
filings made with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act of 1934 from the date of this prospectus until we file a
post-effective amendment which indicates the termination of the offering of the
securities made by this prospectus.
Any statement contained in a document incorporated or considered to be
incorporated by reference in this registration statement shall be considered to
be modified or superseded for purposes of this prospectus to the extent that a
statement contained in this registration statement or in any subsequently filed
document that is or is considered to be incorporated by reference modifies or
supersedes the statement. Any statement that is so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
prospectus.
We will provide without charge upon written or oral request, a copy of any
or all of the documents which are incorporated by reference to this prospectus,
other than exhibits which are specifically incorporated by reference into such
documents. You may direct your requests to Investor Relations,
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Anthracite Capital, Inc., 345 Park Avenue, 29th Floor, New York, New York 10154
(telephone number (212) 409-3333).
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
Some statements contained or incorporated by reference in this registration
statement constitute forward-looking statements as such term is defined in
Section 27A of the Securities Act and Section 21E of the Exchange Act. Some
factors could cause actual results to differ materially from those in the
forward-looking statements. Factors that might cause such a material difference
include, but are not limited to:
(a) changes in the general economic climate,
(b) termination of the management agreement,
(c) interest rate fluctuations,
(d) our failure to qualify as a REIT and
(e) general competitive factors.
ANTHRACITE CAPITAL, INC. AND THE MANAGER
Anthracite Capital, Inc., a Maryland corporation, was formed in November
1997 to invest in multifamily, commercial and residential mortgage loans,
mortgage-backed securities and other real estate related assets in both U.S. and
non-U.S. markets. We have elected to be taxed as a real estate investment trust
under the Internal Revenue Code of 1986, as amended, and we will generally not
be subject to Federal income tax to the extent that we distribute our net income
to our stockholders and qualify for taxation as a REIT. Our operations are
managed by BlackRock Financial Management, Inc. which is referred to in this
prospectus as the Manager. We have no ownership interest in the Manager.
The Manager is a subsidiary of PNC Bank, National Association, which is
itself a wholly owned subsidiary of PNC Bank Corp. Established in 1988, the
Manager is a registered investment adviser under the Investment Advisers Act of
1940 and is one of the largest fixed-income investment management firms in the
United States. The Manager engages in investment and risk management as its sole
businesses and specializes in the management of domestic and offshore
fixed-income assets for pension and profit sharing plans, financial institutions
such as banking and insurance companies and mutual funds for retail and
institutional investors.
The address of the Manager is 345 Park Avenue, 29(th) Floor, New York, New
York 10154.
USE OF PROCEEDS
Unless otherwise specified in a prospectus supplement, we intend to use the
proceeds of any securities sold for general corporate purposes, including
acquisitions.
RATIO OF EARNINGS TO FIXED CHARGES
The following table displays our ratio of earnings to fixed charges.
<TABLE>
<CAPTION>
FOR THE PERIOD
MARCH 24, 1998 SIX MONTHS
THROUGH ENDED
DECEMBER 31, 1998 JUNE 30, 1999
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<S> <C> <C>
Ratio of earnings to fixed charges.............................................. 1.72x 2.30x
</TABLE>
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Earnings were inadequate to cover fixed charges (loss of $1.4 million) for
the fiscal year ended December 31, 1998. The loss included a non-recurring
realized loss of $18.44 million. Excluding the non-recurring loss, the ratio of
earnings to fixed charges was 1.69x. Earnings were adequate to cover fixed
charges for the six months ended June 30, 1999. Excluding the trading strategy
gain, the ratio of earnings to fixed charges was 2.30x.
DESCRIPTION OF SECURITIES
This prospectus contains a summary of the common stock, preferred stock,
debt securities and warrants to purchase our common stock or preferred stock.
These summaries are not meant to be a complete description of each security.
However, this prospectus and the accompanying prospectus supplement contain the
material terms and conditions for each security.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 500,000,000 shares of capital
stock, 400,000,000 of such shares being common stock, par value $.001 per share,
and 100,000,000 shares being preferred stock, par value $.001 per share,
issuable in one or more series. 20,998,334 shares of common stock were issued
and outstanding as of August 11, 1999. No shares of preferred stock were issued
or outstanding as of August 11, 1999. No warrants to purchase either common
stock or preferred stock were issued or outstanding as of August 11, 1999.
COMMON STOCK
VOTING RIGHTS. Each holder of common stock is entitled to one vote for each
share held on all matters to be voted upon by our stockholders, subject to the
provisions of our charter regarding the ownership of shares of common stock in
excess of the ownership limitations described below under "Repurchase of Shares
and Restrictions on Transfer".
DIVIDENDS. The holders of outstanding shares of common stock, subject to
any preferences that may be applicable to any outstanding series of preferred
stock, are entitled to receive ratably such dividends out of assets legally
available for that purpose at such times and in such amounts as the board of
directors may from time to time determine.
LIQUIDATION AND DISSOLUTION. Upon liquidation or dissolution of Anthracite,
the holders of the common stock will be entitled to share ratably in our assets
legally available for distribution to stockholders after payment of, or
provision for, all known debts and liabilities and subject to the prior rights
of any holders of any preferred stock then outstanding.
OTHER RIGHTS. Holders of the common stock generally have equal dividend,
distribution, liquidation and other rights, and shall have no preference,
conversion, exchange, appraisal, preemptive or cumulative voting rights. All
outstanding shares of the common stock are, and any common shares offered by a
prospectus supplement, when issued, will be, duly authorized, fully paid and
non-assessable by Anthracite.
TRANSFER AGENT AND REGISTRAR
The Bank of New York acts as transfer agent and registrar for the common
stock.
PREFERRED STOCK
GENERAL. We are authorized to issue 100,000,000 shares of preferred stock,
none of which currently is issued or outstanding. Our board of directors has the
authority, without further action by the stockholders, to issue shares of
preferred stock in one or more series and to fix the number of shares, dividend
rights, conversion rights, voting rights, redemption rights, liquidation
preferences, sinking funds, and any other rights, preferences, privileges and
restrictions applicable to each such series of preferred stock. The issuance of
preferred stock could have the effect of making an attempt to gain control of us
more difficult by means of a merger, tender offer, proxy contest or otherwise.
The
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preferred stock, if issued, would have a preference on dividend payments that
could affect our ability to make dividend distributions to the common
stockholders. The preferred stock will, when issued, be duly authorized, fully
paid and non-assessable by Anthracite.
A prospectus supplement relating to any series of preferred stock being
offered will include specific terms relating to the offering. They will include:
- the title and stated value of the preferred stock;
- the number of shares of the preferred stock offered, the liquidation
preference per share and the offering price of the preferred stock;
- the dividend rate(s), period(s) and/or payment date(s) or method(s) of
calculation thereof applicable to the preferred stock;
- whether dividends shall be cumulative or non cumulative and, if
cumulative, the date from which dividends on the preferred stock shall
accumulate;
- the procedures for an auction and remarketing, if any, for the preferred
stock;
- the provisions for a sinking fund, if any, for the preferred stock;
- any voting rights of the preferred stock;
- the provisions for redemption, if applicable, of the preferred stock;
- any listing of the preferred stock on any securities exchange;
- the terms and conditions, if applicable, upon which the preferred stock
will be convertible into our common stock, including the conversion price
or the manner of calculating the conversion price and conversion period;
- if appropriate, a discussion of Federal income tax consequences applicable
to the preferred stock;
- any limitations on direct or beneficial ownership and restrictions on
transfer, in each case as may be appropriate to assist us in qualifying as
a REIT;
- all series of preferred stock will rank on a parity with each other unless
otherwise specified in the charter and will rank senior to common stock
with respect payment of dividends and distribution of assets upon
liquidation; and
- any other specific terms, preferences, rights, limitations or restrictions
of the preferred stock.
CONVERSION OR EXCHANGE. The terms, if any, on which the preferred stock may
be convertible into or exchangeable for our common stock or other securities
will be stated in the preferred stock prospectus supplement. The terms will
include provisions as to whether conversion or exchange is mandatory, at the
option of the holder or at our option, and may include provisions pursuant to
which the number of shares of our common stock or other securities to be
received by the holders of preferred stock would be subject to adjustment.
DESCRIPTION OF WARRANTS
We may issue warrants for the purchase of preferred stock or common stock.
Warrants may be issued independently or together with any offered securities and
may be attached to or separate from such securities. Each series of warrants
will be issued under a separate warrant agreement to be entered into between a
warrant agent specified in the agreement and us. The warrant agent will act
solely as our agent in connection with the warrants of that series and will not
assume any obligation or relationship of agency or trust for or with any holders
or beneficial owners of warrants.
The applicable prospectus supplement will describe the following terms,
where applicable, of the warrants in respect of which this prospectus is being
delivered:
- the title of the warrants;
- the aggregate number of the warrants;
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- the price or prices at which the warrants will be issued;
- the currencies in which the price or prices of the warrants may be
payable;
- the designation, amount and terms of the offered securities purchasable
upon exercise of the warrants;
- the designation and terms of the other offered securities, if any, with
which the warrants are issued and the number of the warrants issued with
the security;
- if applicable, the date on and after which the warrants and the offered
securities purchasable upon exercise of the warrants will be separately
transferable;
- the price or prices at which and currency or currencies in which the
offered securities purchasable upon exercise of the warrants may be
purchased;
- the date on which the right to exercise the warrants shall commence and
the date on which the right shall expire;
- the minimum or maximum amount of the warrants which may be exercised at
any one time;
- information with respect to book-entry procedures, if any;
- if appropriate, a discussion of Federal income tax consequences; and
- any other material terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants.
REPURCHASE OF SHARES AND RESTRICTIONS ON TRANSFER
Two of the requirements for qualification as a real estate investment trust
are that
(1) during the last half of each taxable year for which a REIT election is made,
other than the first taxable year for which a REIT election is made, not
more than 50% in value of the outstanding shares may be owned directly or
indirectly by five or fewer individuals. This requirement is known as the
"5/50 Rule"; and
(2) there must be at least 100 stockholders on 335 days of each taxable year of
12 months, other than the first taxable year for which a REIT election is
made.
To assist us in meeting these requirements, the charter prohibits any person
from acquiring or holding, directly or indirectly, in excess of 9.8%, in value
or in number of shares, whichever is more restrictive, of the number of our
outstanding shares of common stock or any class of preferred stock. For this
purpose, the term "ownership" is defined in accordance with the REIT Provisions
of the Internal Revenue Code and the constructive ownership provisions of
Section 544 of the Internal Revenue Code, as modified by Section 856(h)(1)(B) of
the Internal Revenue Code. Subject to certain limitations, our board of
directors may modify the ownership limitations provided such action does not
affect our qualification as a REIT.
For purposes of the 5/50 Rule, the constructive ownership provisions
applicable under Section 544 of the Internal Revenue Code
(1) attribute ownership of securities owned by a corporation, partnership,
estate or trust proportionately to its stockholders, partners or
beneficiaries,
(2) attribute ownership of securities owned by certain family members to other
members of the same family, and
(3) treat securities with respect to which a person has an option to purchase as
actually owned by that person.
These rules will be applied in determining whether a person holds shares of
common stock or preferred stock in violation of the ownership limitations
specified in the articles of amendment and restatement. Accordingly, under
certain circumstances, shares of common stock or preferred stock owned by a
person who individually owns less than 9.8% of the shares outstanding may
nevertheless be
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in violation of the ownership limitations specified in the charter. Ownership of
shares of common stock through such attribution is generally referred to as
constructive ownership. The 100 stockholder test is determined by actual, and
not constructive, ownership.
The articles of amendment and restatement further provide that if any
transfer of shares of common stock which, if effective, would
(1) result in any person beneficially or constructively owning shares of common
stock in excess or in violation of the 9.8% ownership limitations described
above,
(2) result in our stock being beneficially owned by fewer than 100 persons,
determined without reference to any rules of attribution, or
(3) result in us being "closely held" under Section 856(h) of the Internal
Revenue Code,
then that number of shares of common or preferred stock the beneficial or
constructive ownership of which otherwise would cause such person to violate
such limitations, rounded to the nearest whole shares, shall be automatically
transferred to a trustee as trustee of a trust for the exclusive benefit of one
or more charitable beneficiaries, and the intended transferee shall not acquire
any rights in such shares. Shares of common or preferred stock held by the
trustee shall be issued and outstanding shares of common or preferred stock. The
intended transferee shall not benefit economically from owning any shares held
in the trust, shall have no rights to dividends, and shall possess no rights to
vote or other rights attributable to the shares held in the trust. The trustee
shall have all voting rights and rights to dividends or other distributions with
respect to shares held in the trust, which will be exercised for the exclusive
benefit of the charitable beneficiary. Any dividend or other distribution paid
to the intended transferee before our discovery that shares of common or
preferred stock have been transferred to the trustee shall be paid with respect
to such shares to the trustee by the intended transferee upon demand and any
dividend or other distribution authorized but unpaid shall be paid to the
trustee. Our board of directors may, in its discretion, modify these
restrictions on owning shares in excess of the ownership limitations, to the
extent such modifications do not affect our qualification as a REIT.
Within 20 days of receiving notice from us that shares of common or
preferred stock have been transferred to the trust, the trustee shall sell the
shares held in the trust to a person, designated by the trustee, whose ownership
of the shares will not violate the ownership limitations specified in the
charter. Upon such sale, the interest of the charitable beneficiary in the
shares sold shall terminate and the trustee shall distribute the net proceeds of
the sale to the intended transferee and to the charitable beneficiary as
follows: The intended transferee shall receive the lesser of (1) the price paid
by the intended transferee for the shares or, if the intended transferee did not
give value for the shares in connection with the event causing the shares to be
held in the trust, e.g., in the case of a gift, devise or other such
transaction, the market price, as defined below, of the shares on the day of the
event causing the shares to be held in the trust, and (2) the price per share
received by the trustee from the sale or other disposition of the shares held in
the trust. Any net sales proceeds in excess of the amount payable to the
intended transferee shall be immediately paid to the charitable beneficiary. In
addition, shares of common or preferred stock transferred to the trustee shall
be deemed to have been offered for sale to us, or our designee, at a price per
share equal to the lesser of (1) the price per share in the transaction that
resulted in such transfer to the trust or, in the case of a devise or gift, the
market price at the time of such devise or gift, and (2) the market price on the
date we, or our designee, accept such offer. We shall have the right to accept
such offer until the trustee has sold shares held in the trust. Upon such a sale
to us, the interest of the charitable beneficiary in the shares sold shall
terminate and the trustee shall distribute the net proceeds of the sale to the
intended transferee.
The term "market price" on any date shall mean, with respect to any class or
series of outstanding shares of our stock, the closing price, as defined below,
for such shares on such date. The "closing price" on any date shall mean the
last sale price for such shares, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
for such shares, in either case as reported in the principal consolidated
transaction reporting system with respect to
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securities listed or admitted to trading on the New York Stock Exchange or, if
such shares are not listed or admitted to trading on the New York Stock
Exchange, as reported on the principal consolidated transaction reporting system
with respect to securities listed on the principal national securities exchange
on which such shares are listed or admitted to trading or, if such shares are
not listed or admitted to trading on any national securities exchange, the last
quoted price, or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by the National Association
of Securities Dealers, Inc., Automated Quotation Systems, or, if such system is
no longer in use, the principal other automated quotation system that may then
be in use or, if such shares are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in such shares selected by our board of directors
or, in the event that no trading price is available for such shares, the fair
market value of the shares, as determined in good faith by our board of
directors.
Every owner of more than 5%, or such lower percentage as required by the
Internal Revenue Code or the regulations promulgated under the Internal Revenue
Code, of the outstanding shares or any class or series of our stock, within 30
days after the end of each taxable year, is required to give written notice to
us stating the name and address of such owner, the number of shares of each
class and series of our stock beneficially owned and a description of the manner
in which such shares are held. Each owner of more than 5% shall provide to us
additional information as we may request in order to determine the effect, if
any, of such beneficial ownership on our qualification as a REIT and to ensure
compliance with the ownership limitations.
MATERIAL PROVISIONS OF MARYLAND LAW AND OF OUR CHARTER AND BYLAWS
The following is a summary of the material provisions of the Maryland
General Corporation Law, as amended from time to time, and of our charter and
bylaws. It does not restate the material provisions completely. We urge you to
read our charter and bylaws, copies of which are incorporated by reference into
the registration statement of which this prospectus is a part. See "Where You
Can Find More Information." For a description of additional restrictions on
transfer of the common stock, see "Description of Capital Stock--Repurchase of
Shares and Restrictions on Transfer."
REMOVAL OF DIRECTORS
The charter provides that a director may be removed from office at any time
for cause by the affirmative vote of the holders of at least two-thirds of the
votes of the shares entitled to be cast in the election of directors.
STAGGERED BOARD
The charter and bylaws divide the board of directors into three classes of
directors, each class constituting approximately one-third of the total number
of directors, with the classes serving staggered three-year terms. The
classification of the board of directors will make it more difficult for
stockholders to change the composition of the board of directors because only a
minority of the directors can be elected at any one time. The classification
provisions could also discourage a third party from accumulating our stock or
attempting to obtain control of us, even though this attempt might be beneficial
to us and some, or a majority, of our stockholders. Accordingly, under certain
circumstances stockholders could be deprived of opportunities to sell their
shares of common stock or preferred stock at a higher price than might otherwise
be available.
BUSINESS COMBINATIONS
Under the MGCL, certain "business combinations" including a merger,
consolidation, share exchange or, in some circumstances, an asset transfer or
issuance or reclassification of equity securities, between a Maryland
corporation and an "interested stockholder" or an affiliate of an interested
stockholder are prohibited for five years after the most recent date on which
the interested stockholder becomes an interested stockholder. An interested
stockholder is defined in the MGCL as any person
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who beneficially owns 10% or more of the voting power of the corporation's
shares or an affiliate of the corporation who, at any time within the two-year
period prior to the date in question, was the beneficial owner of 10% or more of
the voting power of the then outstanding voting stock of the corporation. During
the five year period, any applicable business combination must be recommended by
the board of directors of that corporation and approved by the affirmative vote
of at least
(a) 80% of the votes entitled to be cast by holders of outstanding shares of
voting stock of the corporation and
(b) two-thirds of the votes entitled to be cast by holders of voting Stock
of the corporation other than shares held by the interested stockholder
with whom, or with whose affiliate, the business combination is to be
effected, unless, among other conditions, the corporation's common
stockholders receive a minimum price, as defined in the MGCL, for their
shares and the consideration is received in cash or in the same form as
previously paid by the interested stockholder for its shares. The MGCL
does not apply, however, to business combinations that are approved or
exempted by the board of directors of the corporation before the
interested stockholder becomes an interested stockholder.
CONTROL SHARE ACQUISITIONS
The MGCL provides that "control shares" of a Maryland corporation acquired
in a "control share acquisition" have no voting rights except to the extent
approved by a vote of two-thirds of the votes entitled to be cast on the matter,
excluding shares of stock owned by the acquirer, by officers or by directors who
are employees of the corporation. "Control shares" are voting shares of stock
which, if aggregated with all other such shares of stock previously acquired by
the acquirer or in respect of which the acquirer is able to exercise or direct
the exercise of voting power, except solely by virtue of a revocable proxy,
would entitle the acquirer to exercise voting power in electing directors within
one of the following ranges of voting power:
(1) one-fifth or more but less than one-third,
(2) one-third or more but less than a majority or
(3) a majority or more of all voting power. Control shares do not include
shares the acquiring person is then entitled to vote as a result of
having previously obtained stockholder approval. A "control share
acquisition" means the acquisition of control shares, subject to certain
exceptions.
A person who has made or proposes to make a control share acquisition, upon
satisfaction of certain conditions, including an undertaking to pay expenses,
may compel the board of directors of the corporation to call a special meeting
of stockholders to be held within 50 days of demand to consider the voting
rights of the shares. If no request for a meeting is made, the corporation may
itself present the question at any stockholders meeting.
If voting rights are not approved at the meeting or if the acquiring person
does not deliver an acquiring person statement as required by the statute, then,
subject to certain conditions and limitations, the corporation may redeem any or
all of the control shares, except those for which voting rights have previously
been approved, for fair value determined, without regard to the absence of
voting rights for the control shares, as of the date of the last control share
acquisition by the acquirer or of any meeting of stockholders at which the
voting rights of such shares are considered and not approved. If voting rights
for control shares are approved at a stockholders meeting and the acquirer
becomes entitled to vote a majority of the shares entitled to vote, all other
stockholders may exercise appraisal rights. The fair value of the shares as
determined for purposes of such appraisal rights may not be less than the
highest price per share paid by the acquirer in the control share acquisition.
The control share acquisition statute does not apply
- to shares acquired in a merger, consolidation or share exchange if the
corporation is a party to the transaction, or
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- to acquisitions approved or exempted by the charter or bylaws of the
corporation.
Our bylaws contain a provision exempting from the control share acquisition
statute any and all acquisitions by any person of our shares of common stock. We
cannot give any assurance that such provision will not be amended or eliminated
at any time in the future.
AMENDMENT TO THE CHARTER
We reserve the right from time to time to make any amendment to our charter
that is authorized by law at present or in the future, including any amendment
which alters the contract rights as expressly stated in the charter, of any
shares of outstanding stock. The charter may be amended only by the affirmative
vote of holders of shares entitled to cast at least a majority of all the votes
entitled to be cast on the matter; provided, however, that provisions relating
to the indemnification of our present and former directors and officers, our
election to be taxed as a REIT, the removal of directors for cause and
dissolution of Anthracite may be amended only by the affirmative vote of a
majority of the board of directors and the holders of shares entitled to cast at
least two-thirds of all the votes entitled to be cast in the election of
directors.
DISSOLUTION OF ANTHRACITE
The dissolution of Anthracite must be approved by the affirmative vote of at
least two-thirds of all of the votes ordinarily entitled to be cast in the
election of directors, voting together as a single class, and the affirmative
vote of holders of at least two-thirds of any series or class of stock expressly
granted a series or class vote on the dissolution of Anthracite in the
resolutions providing for such series or class. Before such vote, the
dissolution must be approved by a majority of the board of directors.
ADVANCE NOTICE OF DIRECTOR NOMINATIONS AND NEW BUSINESS
The bylaws provide that
(a) with respect to an annual meeting of stockholders, nominations of
persons for election to the board of directors and the proposal of
business to be considered by stockholders may be made only
(1) pursuant to our notice of the meeting,
(2) by the board of directors or,
(3) by a stockholder who is entitled to vote at the meeting and has
complied with the advance notice procedures specified in the bylaws,
and
(b) with respect to special meetings of stockholders, only the business
specified in our notice of meeting may be brought before the meeting of
stockholders and nominations of persons for election to the board of
directors or
(c) provided that the board of directors has determined that directors shall
be elected at such meeting, by a stockholder who is entitled to vote at
the meeting and has complied with the advance notice provisions specified
in the bylaws.
POSSIBLE ANTI-TAKEOVER EFFECT OF MATERIAL PROVISIONS OF MARYLAND LAW AND OF THE
CHARTER AND BYLAWS
The business combination provisions and, if the applicable provision in the
bylaws is rescinded, the control share acquisition provisions of the MGCL, the
provisions of the charter creating a staggered board and the advance notice
provisions of the bylaws could delay, defer or prevent a change in control of
Anthracite or other transaction that might involve a premium price for holders
of our common stock or otherwise be in their best interest.
REPORTS TO STOCKHOLDERS
We will furnish our stockholders with annual reports containing audited
financial statements and such other periodic reports as we may determine to
furnish or as may be required by law.
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DESCRIPTION OF DEBT SECURITIES
The following description contains general terms and provisions of the debt
securities to which any prospectus supplement may relate. The particular terms
of the debt securities offered by any prospectus supplement and the extent, if
any, to which such general provisions may not apply to the debt securities so
offered will be described in the prospectus supplement relating to such debt
securities. For more information please refer to the senior indenture among a
trustee to be selected and us, relating to the issuance of the senior notes, and
the subordinated indenture among a trustee to be selected and us, relating to
issuance of the subordinated notes. Forms of these documents are filed as
exhibits to the registration statement, which includes this prospectus.
As used in this prospectus, the term indentures refers to both the senior
indenture and the subordinated indenture. The indentures will be qualified under
the Trust Indenture Act. As used in this prospectus, the term trustee refers to
either the senior trustee or the subordinated trustee, as applicable.
The following are summaries of material provisions of the senior indenture
and the subordinated indenture. They do not restate the indentures in their
entirety. We urge you to read the indentures applicable to a particular series
of debt securities because they, and not this description, define your rights as
the holders of the debt securities. Except as otherwise indicated, the terms of
the senior indenture and the subordinated indenture are identical.
GENERAL
Each prospectus supplement will describe the following terms relating to a
series of notes:
- the title;
- any limit on the amount that may be issued;
- whether or not such series of notes will be issued in global form, the
terms and who the depository will be;
- the maturity date(s);
- the annual interest rate(s) (which may be fixed or variable) or the method
for determining the rate(s) and the date(s) interest will begin to accrue,
the date(s) interest will be payable and the regular record dates for
interest payment dates or the method for determining such date(s);
- the place(s) where payments shall be payable;
- our right, if any, to defer payment of interest and the maximum length of
any such deferral period;
- the date, if any, after which, and the price(s) at which, such series of
notes may, pursuant to any optional redemption provisions, be redeemed at
our option, and other related terms and provisions;
- the date(s), if any, on which, and the price(s) at which we are obligated,
pursuant to any mandatory sinking fund provisions or otherwise, to redeem,
or at the Holder's option to purchase, such series of notes and other
related terms and provisions;
- the denominations in which such series of notes will be issued, if in
other than denominations of $1,000 and any integral multiple thereof; and
- any mandatory or optional sinking fund or similar provisions;
- the currency or currency units of payment of the principal of, premium, if
any, and interest on the notes;
- any index used to determine the amount of payments of the principal of,
premium, if any, and interest on the notes and the manner in which such
amounts shall be determined;
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- the terms pursuant to which such notes are subject to defeasance;
- the terms and conditions, if any, pursuant to which such notes are
secured;
- any other terms (which terms shall not be inconsistent with the
Indenture).
The notes may be issued as original issue discount securities. An original
issue discount security is a note, including any zero-coupon note, which:
- is issued at a price lower than the amount payable upon its stated
maturity and
- provides that upon redemption or acceleration of the maturity, an amount
less than the amount payable upon the stated maturity, shall become due
and payable.
United States federal income tax consequences applicable to notes sold at an
original issue discount will be described in the applicable prospectus
supplement. In addition, United States federal income tax or other consequences
applicable to any notes which are denominated in a currency or currency unit
other than United States dollars may be described in the applicable prospectus
supplement.
Under the indentures, we will have the ability, in addition to the ability
to issue notes with terms different from those of notes previously issued,
without the consent of the holders, to reopen a previous issue of a series of
notes and issue additional notes of that series, unless the reopening was
restricted when the series was created, in an aggregate principal amount
determined by us.
CONVERSION OR EXCHANGE RIGHTS
The terms, if any, on which a series of notes may be convertible into or
exchangeable for our common stock or other securities will be described in the
prospectus supplement relating to that series of notes. The terms will include
provisions as to whether conversion or exchange is mandatory, at the option of
the holder or at our option, and may include provisions pursuant to which the
number of shares of our common stock or other securities to be received by the
holders of the series of notes would be subject to adjustment.
CONSOLIDATION, MERGER OR SALE
The indentures do not contain any covenant which restricts our ability to
merge or consolidate, or sell, convey, transfer or otherwise dispose of all or
substantially all of their assets. However, any successor or acquirer of such
assets must assume all of our obligations under the indentures or the notes, as
appropriate.
EVENTS OF DEFAULT UNDER THE INDENTURE
The following are events of default under the indentures with respect to any
series of notes issued:
- failure to pay interest when due and such failure continues for 30 days
and the time for payment has not been extended or deferred;
- failure to pay the principal (or premium, if any) when due;
- failure to observe or perform any other covenant contained in the notes or
the indentures (other than a covenant specifically relating to another
series of notes), and such failure continues for 90 days after we receive
notice from the trustee or holders of at least 25% in aggregate principal
amount of the outstanding notes of that series; and
- certain events of bankruptcy, insolvency or reorganization of Anthracite.
If an event of default with respect to notes of any series occurs and is
continuing, the trustee or the holders of at least 25% in aggregate principal
amount of the outstanding notes of that series, by
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notice in writing to us (and to the trustee if notice is given by such holders),
may declare the unpaid principal of, premium, if any, and accrued interest, if
any, due and payable immediately.
The holders of a majority in principal amount of the outstanding notes of an
affected series may waive any default or event of default with respect to such
series and its consequences, except defaults or events of default regarding:
- payment of principal, premium, if any, or interest; or
- certain covenants containing limitations on our ability to pay dividends
and make payments on debt securities in certain circumstances.
Any such waiver shall cure such default or event of default.
Subject to the terms of the indentures, if an event of default under an
indenture shall occur and be continuing, the trustee will be under no obligation
to exercise any of its rights or powers under such indenture at the request or
direction of any of the holders of the applicable series of notes, unless such
holders have offered the trustee reasonable indemnity. The holders of a majority
in principal amount of the outstanding notes of any series will have the right
to direct the time, method and place of conducting any proceeding for any remedy
available to the trustee, or exercising any trust or power conferred on the
trustee, with respect to the notes of that series, provided that:
- it is not in conflict with any law or the applicable indenture;
- the trustee may take any other action deemed proper by it which is not
inconsistent with such direction; and
- subject to its duties under the Trust Indenture Act, the trustee need not
take any action that might involve it in personal liability or might be
unduly prejudicial to the holders not involved in the proceeding.
A holder of the notes of any series will only have the right to institute a
proceeding under the indentures or to appoint a receiver or trustee, or to seek
other remedies if:
- the holder has given written notice to the trustee of a continuing event
of default with respect to that series;
- the holders of at least 25% in aggregate principal amount of the
outstanding notes of that series have made written request, and such
holders have offered reasonable indemnity to the trustee to institute such
proceedings as trustee; and
- the trustee does not institute such proceeding, and does not receive from
the holders of a majority in the aggregate principal amount of the
outstanding notes of that series other conflicting directions within 60
days after such notice, request and offer.
These limitations do not apply to a suit instituted by a holder of notes if
we default in the payment of the principal, premium, if any, or interest on, the
notes.
We will periodically file statements with the trustee regarding our
compliance with certain of the covenants in the indentures.
MODIFICATION OF INDENTURE; WAIVER
Anthracite and the trustee may change an indenture without the consent of
any holders with respect to certain matters, including:
- to fix any ambiguity, defect or inconsistency in such indenture; and
- to change anything that does not materially adversely affect the interests
of any holder of notes of any series.
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In addition, under the indentures, the rights of holders of a series of
notes may be changed by us and the trustee with the written consent of the
holders of at least a majority in aggregate principal amount of the outstanding
notes of each series that is affected. However, we can make the following
changes only with the consent of each holder of any outstanding notes affected:
- extending the fixed maturity of such series of notes;
- change any of our obligations to pay additional amounts;
- reducing the principal amount, reducing the rate of or extending the time
of payment of interest, or any premium payable upon the redemption of any
such notes;
- reducing the percentage of notes, the holders of which are required to
consent to any amendment.
- reduce the amount of principal of an original issue discount security or
any other note payable upon acceleration of the maturity thereof,
- change currency in which any note or any premium or interest is payable,
- impair the right to enforce any payment on or with respect to any note,
- adversely change the right to convert or exchange, including decreasing
the conversion rate or increasing the conversion price of, such note, if
applicable,
- in the case of the subordinated indenture, modify the subordination
provisions in a manner adverse to the holders of the subordinated notes,
- if the notes are secured, change the terms and conditions pursuant to
which the notes are secured in a manner adverse to the holders of the
secured notes,
- reduce the percentage in principal amount of outstanding notes of any
series, the consent of whose holders is required for modification or
amendment of the applicable indenture or for waiver of compliance with
certain provisions of the applicable indenture or for waiver of certain
defaults,
- reduce the requirements contained in the applicable indenture for quorum
or voting,
- change any of our obligations to maintain an office or agency in the
places and for the purposes required by the indentures, or
- modify any of the above provisions.
FORM, EXCHANGE, AND TRANSFER
The notes of each series will be issuable only in fully registered form
without coupons and, unless otherwise specified in the applicable prospectus
supplement, in denominations of $1,000 and any integral multiple thereof. The
indentures will provide that notes of a series may be issuable in temporary or
permanent global form and may be issued as book-entry securities that will be
deposited with, or on behalf of, The Depository Trust Company or another
depository named by us and identified in a prospectus supplement with respect to
such series.
At the option of the holder, subject to the terms of the indentures and the
limitations applicable to global securities described in the applicable
prospectus supplement, notes of any series will be exchangeable for other notes
of the same series, in any authorized denomination and of like tenor and
aggregate principal amount.
Subject to the terms of the indentures and the limitations applicable to
global securities described in the applicable prospectus supplement, notes may
be presented for exchange or for registration of transfer, duly endorsed or with
the form of transfer endorsed, duly executed if so required by us or the
security registrar, at the office of the security registrar or at the office of
any transfer agent designated by us for such purpose. Unless otherwise provided
in the notes to be transferred or exchanged, we will not require a service
charge for any registration of transfer or exchange, but we may require payment
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of any taxes or other governmental charges. The security registrar and any
transfer agent initially designated by us for any notes will be named in the
applicable prospectus supplement. We may at any time designate additional
transfer agents or rescind the designation of any transfer agent or approve a
change in the office through which any transfer agent acts, except that we will
be required to maintain a transfer agent in each place of payment for the notes
of each series.
If the notes of any series are to be redeemed, we will not be required to:
- issue, register the transfer of, or exchange any notes of that series
during a period beginning at the opening of business 15 days before the
day of mailing of a notice of redemption of any such notes that may be
selected for redemption and ending at the close of business on the day of
such mailing; or
- register the transfer of or exchange any notes so selected for redemption,
in whole or in part, except the unredeemed portion of any such notes being
redeemed in part.
INFORMATION CONCERNING THE TRUSTEE
The trustee, other than during the occurrence and continuance of an event of
default under an indenture, undertakes to perform only such duties as are
specifically described in the indentures and, upon an event of default under an
indenture, must use the same degree of care as a prudent person would exercise
or use in the conduct of his or her own affairs. Subject to this provision, the
trustee is under no obligation to exercise any of the powers given it by the
indentures at the request of any holder of notes unless it is offered reasonable
security and indemnity against the costs, expenses and liabilities that it might
incur. The trustee is not required to spend or risk its own money or otherwise
become financially liable while performing its duties unless it reasonably
believes that it will be repaid or receive adequate indemnity.
PAYMENT AND PAYING AGENTS
Unless otherwise indicated in the applicable prospectus supplement, payment
of the interest on any notes on any interest payment date will be made to the
person in whose name such notes or one or more predecessor securities are
registered at the close of business on the regular record date for such
interest.
Principal of and any premium and interest on the notes of a particular
series will be payable at the office of the paying agents designated by us,
except that unless otherwise indicated in the applicable prospectus supplement,
interest payments may be made by check mailed to the holder. Unless otherwise
indicated in such prospectus supplement, the corporate trust office of the
trustee in The City of New York will be designated as our sole paying agent for
payments with respect to notes of each series. Any other paying agents initially
designated by us for the notes of a particular series will be named in the
applicable prospectus supplement. We will be required to maintain a paying agent
in each place of payment for the notes of a particular series.
All moneys paid by us to a paying agent or the trustee for the payment of
the principal of or any premium or interest on any notes which remains unclaimed
at the end of two years after the principal, premium or interest has become due
and payable will be repaid to us, and the holder of the security may then look
only to us for payment.
GOVERNING LAW
The indentures and the notes will be governed by and construed in accordance
with the laws of the State of New York except to the extent that the Trust
Indenture Act shall be applicable.
SUBORDINATION OF SUBORDINATED NOTES
The subordinated notes will be unsecured and will be subordinate and junior
in priority of payment to certain of our other indebtedness to the extent
described in a prospectus supplement. The subordinated indenture does not limit
the amount of subordinated notes which we may issue, nor does it limit us from
issuing any other secured or unsecured debt.
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MATERIAL FEDERAL INCOME TAX CONSEQUENCES
THE FOLLOWING IS A SUMMARY OF THE FEDERAL INCOME TAX CONSEQUENCES
ANTICIPATED TO BE MATERIAL TO AN INVESTOR IN ANTHRACITE. THIS SUMMARY IS BASED
ON CURRENT LAW, IS FOR GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. YOUR TAX
CONSEQUENCES RELATED TO AN INVESTMENT IN ANTHRACITE MAY VARY DEPENDING ON YOUR
PARTICULAR SITUATION AND THIS DISCUSSION DOES NOT PURPORT TO DISCUSS ALL ASPECTS
OF TAXATION THAT MAY BE RELEVANT TO A HOLDER OF OUR SECURITIES IN LIGHT OF HIS
OR HER PERSONAL INVESTMENT OR TAX CIRCUMSTANCES, OR TO HOLDERS OF OUR SECURITIES
SUBJECT TO SPECIAL TREATMENT UNDER THE FEDERAL INCOME TAX LAWS EXCEPT TO THE
EXTENT DISCUSSED UNDER THE HEADINGS "--TAXATION OF TAX-EXEMPT STOCKHOLDERS" AND
"--TAXATION OF NON-U.S. STOCKHOLDERS." INVESTORS SUBJECT TO SPECIAL TREATMENT
INCLUDE, WITHOUT LIMITATION, INSURANCE COMPANIES, FINANCIAL INSTITUTIONS,
BROKER-DEALERS, TAX-EXEMPT ORGANIZATIONS, INVESTORS HOLDING SECURITIES AS PART
OF A CONVERSION TRANSACTION, OR A HEDGE OR HEDGING TRANSACTION OR AS A POSITION
IN A STRADDLE FOR TAX PURPOSES, FOREIGN CORPORATIONS OR PARTNERSHIPS, AND
PERSONS WHO ARE NOT CITIZENS OR RESIDENTS OF THE UNITED STATES. IN ADDITION, THE
SUMMARY BELOW DOES NOT CONSIDER THE EFFECT OF ANY FOREIGN, STATE, LOCAL OR OTHER
TAX LAWS THAT MAY BE APPLICABLE TO YOU AS A HOLDER OF OUR SECURITIES.
The information in this summary is based on the Internal Revenue Code of
1986, as amended, current, temporary and proposed Treasury regulations
promulgated under the Internal Revenue Code, the legislative history of the
Internal Revenue Code, current administrative interpretations and practices of
the Internal Revenue Service, and court decisions, all as of the date of this
prospectus. The administrative interpretations and practices of the Internal
Revenue Service upon which this summary is based include its practices and
policies as expressed in private letter rulings which are not binding on the
Internal Revenue Service, except with respect to the taxpayers who requested and
received such rulings. Future legislation, Treasury regulations, administrative
interpretations and practices, and court decisions may affect the tax
consequences contained in this summary, possibly on a retroactive basis. We have
not requested, and do not plan to request, any rulings from the Internal Revenue
Service concerning our tax treatment, and the statements in this prospectus are
not binding on the Internal Revenue Service or a court. Thus, we can provide no
assurance that the tax consequences contained in this summary will not be
challenged by the Internal Revenue Service or sustained by a court if challenged
by the Internal Revenue Service.
YOU ARE URGED TO CONSULT YOUR TAX ADVISOR REGARDING THE SPECIFIC TAX
CONSEQUENCES TO YOU OF (1) THE ACQUISITION, OWNERSHIP AND SALE OR OTHER
DISPOSITION OF OUR SECURITIES, INCLUDING THE FEDERAL, STATE, LOCAL, FOREIGN AND
OTHER TAX CONSEQUENCES, (2) OUR ELECTION TO BE TAXED AS A REAL ESTATE INVESTMENT
TRUST FOR FEDERAL INCOME TAX PURPOSES AND (3) POTENTIAL CHANGES IN APPLICABLE
TAX LAWS.
TAXATION OF ANTHRACITE
GENERAL
We have elected to be taxed as a REIT under Sections 856 through 860 of the
Internal Revenue Code, commencing with our taxable year ended December 31, 1998.
We believe we have been organized and have operated in a manner which allows us
to qualify for taxation as a REIT under the Internal Revenue Code, and we intend
to continue to operate in this manner. Our qualification and taxation as a REIT,
however, depend upon our ability to meet, through actual annual operating
results, asset requirements, distribution levels, diversity of stock ownership,
and the various other qualification tests imposed under the Internal Revenue
Code. Accordingly, there can be no assurance that we have operated or will
continue to operate in a manner so as to qualify or remain qualified as a REIT.
See "--Failure to Qualify."
The sections of the Internal Revenue Code that relate to the qualification
and taxation of REITs are highly technical and complex. The following describes
the material aspects of the sections of the
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Internal Revenue Code that govern the Federal income tax treatment of a REIT and
its stockholders. This summary is qualified in its entirety by the applicable
Internal Revenue Code provisions, rules and regulations promulgated under the
Internal Revenue Code, and administrative and judicial interpretations of the
Internal Revenue Code.
Provided we qualify for taxation as a REIT, we generally will not be subject
to Federal corporate income tax on our net income that is currently distributed
to our stockholders. This treatment substantially eliminates the "double
taxation" that generally results from an investment in a corporation. Double
taxation means taxation once at the corporate level when income is earned and
once again at the stockholder level when such income is distributed. Even if we
qualify for taxation as a REIT, however, we will be subject to Federal income
taxation as follows:
- We will be required to pay tax at regular corporate rates on any
undistributed REIT taxable income, including undistributed net capital
gains.
- We may be subject to the "alternative minimum tax" on items of tax
preference, if any.
- If we have (a) net income from the sale or other disposition of
"foreclosure property" which is held primarily for sale to customers in
the ordinary course of business or (b) other nonqualifying income from
foreclosure property, we will be required to pay tax at the highest
corporate rate on this income. In general, foreclosure property is
property acquired through foreclosure after a default on a loan secured by
the property or on a lease of the property.
- We will be required to pay a 100% tax on any net income from prohibited
transactions. In general, prohibited transactions are sales or other
taxable dispositions of property, other than foreclosure property, held
for sale to customers in the ordinary course of business.
- If we fail to satisfy the 75% or 95% gross income tests, as described
below, but have maintained our qualification as a REIT, we will be
required to pay a 100% tax on an amount equal to (a) the gross income
attributable to the greater of the amount by which we fail the 75% or 95%
gross income test multiplied by (b) a fraction intended to reflect our
profitability.
- We will be required to pay a 4% excise tax on the amount by which our
annual distributions to our stockholders is less than the sum of (1) 85%
of our ordinary income for the year, (2) 95% of our real estate investment
trust capital gain net income for the year, and (3) any undistributed
taxable income from prior periods.
- If we acquire an asset from a corporation which is not a REIT in a
transaction in which the basis of the asset in our hands is determined by
reference to the basis of the asset in the hands of the transferor
corporation, and we subsequently sell the asset within ten years, then
under Treasury regulations not yet issued, we would be required to pay tax
at the highest regular corporate tax rate on this gain to the extent (a)
the fair market value of the asset exceeds (b) our adjusted tax basis in
the asset, in each case, determined as of the date on which we acquired
the asset. The results described in this paragraph assume that we will
elect this treatment in lieu of an immediate tax when the asset is
acquired.
- We will generally be subject to tax on the portion of any "excess
inclusion" income derived from an investment in residual interests in real
estate mortgage investment conduits to the extent our stock is held by
specified tax exempt organizations not subject to tax on unrelated
business taxable income.
REQUIREMENTS FOR QUALIFICATION AS A REAL ESTATE INVESTMENT TRUST
The Internal Revenue Code defines a REIT as a corporation, trust or
association:
(1) that is managed by one or more trustees or directors;
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(2) that issues transferable shares or transferable certificates to its
owners;
(3) that would be taxable as a regular corporation, but for its election to
be taxed as a REIT;
(4) that is not a financial institution or an insurance company under the
Internal Revenue Code;
(5) that is owned by 100 or more persons;
(6) not more than 50% in value of the outstanding stock of which is owned,
actually or constructively, by five or fewer individuals, as defined in
the Internal Revenue Code to include some entities, during the last half
of each year; and
(7) that meets other tests, described below, regarding the nature of its
income and assets, and the amount of its distributions.
The Internal Revenue Code provides that conditions (1) to (4) must be met
during the entire year and that condition (5) must be met during at least 335
days of a year of twelve months, or during a proportionate part of a shorter
taxable year. Conditions (5) and (6) do not apply to the first taxable year for
which an election is made to be taxed as a REIT. For purposes of condition (6),
tax-exempt entities are generally treated as individuals, subject to a
"look-through" exception for pension funds.
Our charter provides for restrictions regarding ownership and transfer of
our stock. These restrictions are intended to assist us in satisfying the share
ownership requirements described in (5) and (6) above. These stock ownership and
transfer restrictions are described in "Description of Capital
Stock--Restrictions on Ownership and Transfer." These restrictions, however, may
not ensure that we will, in all cases, be able to satisfy the share ownership
requirements described in (5) and (6) above. If we fail to satisfy these share
ownership requirements, our status as a REIT would terminate. If, however, we
comply with the rules contained in applicable Treasury regulations that require
us to determine the actual ownership of our shares and we do not know, or would
not have known through the exercise of reasonable diligence, that we failed to
meet the requirement described in condition (6) above, we would not be
disqualified as a REIT.
In addition, a corporation may not qualify as a REIT unless its taxable year
is the calendar year. We have and will continue to have a calendar taxable year.
OWNERSHIP OF A PARTNERSHIP INTEREST
The Treasury regulations provide that if we are a partner in a partnership,
we will be deemed to own our proportionate share of the assets of the
partnership, and we will be deemed to be entitled to our proportionate share of
the gross income of the partnership. The character of the assets and gross
income of the partnership generally retains the same character in our hands for
purposes of satisfying the gross income and asset tests described below.
QUALIFED REIT SUBSIDIARIES
A "qualified REIT subsidiary" is a corporation, all of the stock of which is
owned by a REIT. Under the Internal Revenue Code, a qualified REIT subsidiary is
not treated as a separate corporation from the REIT. Rather, all of the assets,
liabilities, and items of income, deduction, and credit of the qualified REIT
subsidiary are treated as the assets, liabilities, and items of income,
deduction, and credit of the REIT for purposes of the REIT income and asset
tests described below.
INCOME TESTS
We must meet two annual gross income requirements to qualify as a REIT.
First, each year we must derive, directly or indirectly, at least 75% of our
gross income, excluding gross income from prohibited transactions, from
investments relating to real property or mortgages on real property,
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including "rents from real property" and mortgage interest, or from specified
temporary investments. Second, each year we must derive at least 95% of our
gross income, excluding gross income from prohibited transactions, from
investments meeting the 75% test described above, or from dividends, interest
and gain from the sale or disposition of stock or securities. For these
purposes, the term "interest" generally does not include any interest of which
the amount received depends on the income or profits of any person. An amount
will generally not be excluded from the term "interest," however, if such amount
is based on a fixed percentage of receipts or sales.
Any amount includable in gross income by us with respect to a regular or
residual interest in a real estate mortgage investment conduit is generally
treated as interest on an obligation secured by a mortgage on real property for
purposes of the 75% gross income test. If, however, less than 95% of the assets
of a real estate mortgage investment conduit consist of real estate assets, we
will be treated as receiving directly our proportionate share of the income of
the real estate mortgage investment conduit, which would generally include
non-qualifying income for purposes of the 75% gross income test. In addition, if
we receive interest income with respect to a mortgage loan that is secured by
both real property and other property and the principal amount of the loan
exceeds the fair market value of the real property on the date we purchased the
mortgage loan, interest income on the loan will be apportioned between the real
property and the other property, which apportionment would cause us to recognize
income that is not qualifying income for purposes of the 75% gross income test.
In general, and subject to the exceptions in the preceding paragraph, the
interest, original issue discount, and market discount income that we derive
from investments in mortgage backed securities, and mortgage loans will be
qualifying interest income for purposes of both the 75% and the 95% gross income
tests. It is possible, however, that interest income from a mortgage loan may be
based in part on the borrower's profits or net income, which would generally
disqualify such interest income for purposes of both the 75% and the 95% gross
income tests.
We may acquire construction loans or mezzanine loans that have shared
appreciation provisions. To the extent interest on a loan is based on the cash
proceeds from the sale or value of property, income attributable to such
provision would be treated as gain from the sale of the secured property, which
generally should qualify for purposes of the 75% and 95% gross income tests.
We may employ, to the extent consistent with the REIT Provisions of the
Code, forms of securitization of our assets under which a "sale" of an interest
in a mortgage loan occurs, and a resulting gain or loss is recorded on our
balance sheet for accounting purposes at the time of sale. In a "sale"
securitization, only the net retained interest in the securitized mortgage loans
would remain on our balance sheet. We may elect to conduct certain of its
securitization activities, including such sales, through one or more taxable
subsidiaries, or through qualified REIT subsidiaries, formed for such purpose.
To the extent consistent with the REIT Provisions of the Code, such entities
could elect to be taxed as real estate mortgage investment conduits or financial
asset securitization investment trusts.
Rents we receive will qualify as "rents from real property" only if the
following conditions are met:
- the amount of rent may not be based in whole or in part on the income or
profits of any person. "Rents from real property" may, however, include
rent based on a fixed percentage of receipts or sales;
- rents received from a tenant will not qualify as "rents from real
property" if the REIT, or an actual or constructive owner of 10% or more
of the REIT, actually or constructively owns 10% or more of such tenant;
- if rent attributable to personal property leased in connection with a
lease of real property is greater than 15% of the total rent received
under the lease, then the portion of rent attributable to personal
property will not qualify as "rents from real property"; and
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- to qualify as "rents from real property," the REIT generally may not
render services to tenants of the property, other than through an
independent contractor from whom the REIT derives no revenue. The REIT
may, however, provide services that are "usually or customarily rendered"
in connection with the rental of space for occupancy only and are not
otherwise considered "rendered to the occupant" of the property. In
addition, a REIT may provide a DE MINIMUS amount of non-customary
services.
If we fail to satisfy one or both of the 75% or 95% gross income tests for
any year, we may still qualify as a REIT if we are entitled to relief under the
Internal Revenue Code. Generally, we may be entitled to relief if:
- our failure to meet the gross income tests was due to reasonable cause and
not due to willful neglect;
- we attach a schedule of the sources of our income to our Federal income
tax return; and
- any incorrect information on the schedule was not due to fraud with the
intent to evade tax.
It is not possible to state whether in all circumstances we would be
entitled to rely on these relief provisions. If these relief provisions do not
apply to a particular set of circumstances, we would not qualify as a REIT. As
discussed above in "--Taxation of Anthracite--General", even if these relief
provisions apply, and we retain our status as a REIT, a tax would be imposed
with respect to our income that does not meet the gross income tests. We may not
always be able to maintain compliance with the gross income tests for REIT
qualification despite periodically monitoring our income.
FORECLOSURE PROPERTY
Net income realized by us from foreclosure property would generally be
subject to tax at the maximum Federal corporate tax rate. Foreclosure property
means real property and related personal property that (1) is acquired by us
through foreclosure following a default on a lease of such property or a default
on indebtedness owed to us that is secured by the property and (2) for which we
make an election to treat the property as foreclosure property.
PROHIBITED TRANSACTION INCOME
Any gain realized by us on the sale of any property, other than foreclosure
property, held as inventory or otherwise held primarily for sale to customers in
the ordinary course of business will be prohibited transaction income, and
subject to a 100% penalty tax. Prohibited transaction income may also adversely
affect our ability to satisfy the gross income tests for qualification as a
REIT. Whether property is held as inventory or primarily for sale to customers
in the ordinary course of a trade or business depends on all the facts and
circumstances surrounding the particular transaction. While the Treasury
regulations provide standards which, if met, would not result in prohibited
transaction income, we may not be able to meet these standards in all
circumstances.
HEDGING TRANSACTIONS
We may enter into hedging transactions with respect to one or more of our
assets or liabilities. Our hedging transactions could take a variety of forms,
including interest rate swaps or cap agreements, options, futures contracts,
forward rate agreements, or similar financial instruments. To the extent that we
enter into hedging transactions to reduce our interest rate risk on indebtedness
incurred to acquire or carry real estate assets, any income, or gain from the
disposition of hedging transactions should be qualifying income for purposes of
the 95% gross income test, but not the 75% gross income test.
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ASSET TESTS
At the close of each quarter of each year, we also must satisfy three tests
relating to our assets. First, at least 75% of the value of our total assets
must be real estate assets, cash, cash items and government securities. For
purposes of this test, real estate assets include real estate mortgages, real
property, interests in other REITs and stock or debt instruments held for one
year or less that are purchased with the proceeds of a stock offering or a
long-term public debt offering. Second, not more than 25% of our total assets
may be represented by securities, other than those securities includable in the
75% asset class. Third, of the investments included in the 25% asset class, the
value of any one issuer's securities that we hold may not exceed 5% of the value
of our total assets, and we may not own more than 10% of the voting stock of a
corporation.
We expect that any mortgage backed securities, real property, and temporary
investments that we acquire will generally be qualifying assets for purposes of
the 75% asset test, except to the extent that less than 95% of the assets of a
real estate mortgage investment conduit in which we own an interest consists of
"real estate assets." Mortgage loans, including distressed mortgage loans,
construction loans, bridge loans, and mezzanine loans also will generally be
qualifying assets for purposes of the 75% asset test to the extent that the
principal balance of each mortgage loan does not exceed the value of the
associated real property.
We anticipate that we may securitize all or a portion of the mortgage loans
which we acquire, in which event we will likely retain certain of the
subordinated and interest only classes of mortgage backed securities which may
be created as a result of such securitization. The securitization of mortgage
loans may be accomplished through one or more real estate mortgage investment
conduits established by us or, if a non-real estate mortgage investment conduit
securitization is desired, through one or more qualified REIT subsidiaries or
taxable subsidiaries established by us. The securitization of the mortgage loans
through either one or more real estate mortgage investment conduits or one or
more qualified REIT subsidiaries or taxable subsidiaries should not affect our
qualification as a REIT or result in the imposition of corporate income tax
under the taxable mortgage pool rules. Income realized by us from a real estate
mortgage investment conduit securitization could, however, be subject to a 100%
tax as a "prohibited transaction." See "--Prohibited Transaction Income."
After meeting the asset tests at the close of any quarter, we will not lose
our status as a REIT if we fail to satisfy the asset tests at the end of a later
quarter solely by reason of changes in asset values. In addition, if we fail to
satisfy the asset tests because we acquire securities or other property during a
quarter, we can cure this failure by disposing of sufficient nonqualifying
assets within 30 days after the close of that quarter.
We will monitor the status of the assets that we acquire for purposes of the
various asset tests and we will manage our portfolio in order to comply with
such tests.
ANNUAL DISTRIBUTION REQUIREMENTS
To qualify as a REIT, we are required to distribute dividends, other than
capital gain dividends, to our stockholders in an amount at least equal to the
sum of (1) 95% of our "REIT taxable income" and (2) 95% of our after tax net
income, if any, from foreclosure property, minus (3) the sum of certain items of
noncash income. In general,"REIT taxable income" means taxable ordinary income
without regard to the dividends paid deduction.
We are required to distribute income in the taxable year which it is earned,
or in the following taxable year before we timely file our tax return if such
dividend distributions are declared and paid on or before our first regular
dividend payment. Except as provided in "--Taxation of Taxable U.S.
Stockholders" below, these distributions are taxable to holders of common stock
in the year in which paid, even though these distributions relate to our prior
year for purposes of our 95% distribution
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requirement. To the extent that we do not distribute all of our net capital gain
or distribute at least 95%, but less than 100% or our "REIT taxable income," we
will be subject to tax at regular corporate tax rates.
From time to time we may not have sufficient cash or other liquid assets to
meet the above distribution requirements due to timing differences between the
actual receipt of cash and payment of expenses, and the inclusion of income and
deduction of expenses in arriving at our taxable income. If these timing
differences occur, in order to meet the REIT distribution requirements, we may
need to arrange for short-term, or possibly long-term, borrowings, or to pay
dividends in the form of taxable stock dividends.
Under certain circumstances, we may be able to rectify a failure to meet a
distribution requirement for a year by paying "deficiency dividends" to our
stockholders in a later year, which may be included in our deduction for
dividends paid for the earlier year. Thus, we may be able to avoid being subject
to tax on amounts distributed as deficiency dividends. We will be required,
however, to pay interest based upon the amount of any deduction claimed for
deficiency dividends. In addition, we will be subject to a 4% excise tax on the
excess of the required distribution over the amounts actually distributed if we
should fail to distribute each year at least the sum of 85% of our ordinary
income for the year, 95% of our capital gain income for the year, and any
undistributed taxable income from prior periods.
RECORDKEEPING REQUIREMENTS
We are required to maintain records and request on an annual basis
information from specified stockholders. This requirement is designed to
disclose the actual ownership of our outstanding stock.
FAILURE TO QUALIFY
If we fail to qualify for taxation as a REIT in any taxable year, and the
relief provisions of the Internal Revenue Code described above do not apply, we
will be subject to tax, including any applicable alternative minimum tax, and
possibly increased state and local taxes, on our taxable income at regular
corporate rates. Such taxation would reduce the cash available for distribution
by us to our stockholders. Distributions to our stockholders in any year in
which we fail to qualify as a REIT will not be deductible by us and we will not
be required to distribute any amounts to our stockholders. If we fail to qualify
as a REIT, distributions to our stockholders will be subject to tax as ordinary
income to the extent of our current and accumulated earnings and profits and,
subject to certain limitations of the Internal Revenue Code, corporate
stockholders may be eligible for the dividends received deduction. Unless
entitled to relief under specific statutory provisions, we would also be
disqualified from taxation as a REIT for the four taxable years following the
year during which we lost our qualification. It is not possible to state whether
in all circumstances we would be entitled to statutory relief.
TAXATION OF TAXABLE U.S. STOCKHOLDERS
When we use the term "U.S. stockholders," we mean a holder of shares of our
stock who is, for United States federal income tax purposes:
- a citizen or resident of the United States;
- a corporation, partnership, or other entity created or organized in or
under the laws of the United States or of any state thereof or in the
District of Columbia, unless Treasury regulations provide otherwise;
- an estate the income of which is subject to United States federal income
taxation regardless of its source; or
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- a trust whose administration is subject to the primary supervision of a
United States court and which has one or more United States persons who
have the authority to control all substantial decisions of the trust.
DISTRIBUTIONS GENERALLY
Distributions out of our current or accumulated earnings and profits, other
than capital gain dividends will be taxable to our U.S. stockholders as ordinary
income. Provided we qualify as a REIT, our dividends will not be eligible for
the dividends received deduction generally available to U.S. stockholders that
are corporations.
To the extent that we make distributions in excess of our current and
accumulated earnings and profits, these distributions will be treated as a
tax-free return of capital to each U.S. stockholder, and will reduce the
adjusted tax basis which each U.S. stockholder has in its shares of stock by the
amount of the distribution, but not below zero. Return of capital distributions
in excess of a U.S. stockholder's adjusted tax basis in its shares will be
taxable as capital gain, provided that the shares have been held as capital
assets, and will be taxable as long-term capital gain if the shares have been
held for more than one year. Dividends we declare in October, November, or
December of any year and pay to a stockholder of record on a specified date in
any of those months will be treated as both paid by us and received by the
stockholder on December 31 of that year, provided we pay the dividend in January
of the following year. Stockholders may not include in their own income tax
returns any of our net operating losses or capital losses.
CAPITAL GAIN DISTRIBUTIONS
Distributions designated as net capital gain dividends will be taxable to
our U.S. stockholders as capital gain income. Such capital gain income will be
taxable to non-corporate U.S. stockholders at a 20% or 25% rate based on the
characteristics of the asset we sold that produced the gain. U.S. stockholders
that are corporations may be required to treat up to 20% of certain capital gain
dividends as ordinary income.
RETENTION OF NET CAPITAL GAINS
We may elect to retain, rather than distribute as a capital gain dividend,
our net capital gains. If we make this election, we would pay tax on such
retained capital gains. In such a case, our stockholders would generally:
- include their proportionate share of our undistributed net capital gains
in their taxable income;
- receive a credit for their proportionate share of the tax paid by us; and
- increase the adjusted basis of their stock by the difference between the
amount of their capital gain and their share of the tax paid by us;
PASSIVE ACTIVITY LOSSES AND INVESTMENT INTEREST LIMITATIONS
Distributions we make and gain arising from the sale or exchange by a U.S.
stockholder of our shares will not be treated as passive activity income. As a
result, U.S. stockholders will not be able to apply any "passive losses" against
income or gain relating to our stock. Distributions we make, to the extent they
do not constitute a return of capital, generally will be treated as investment
income for purposes of computing the investment interest limitation.
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DISPOSITIONS OF STOCK
If you are a U.S. stockholder and you sell or dispose of your shares of
stock, you will recognize gain or loss for Federal income tax purposes in an
amount equal to the difference between the amount of cash and the fair market
value of any property you receive on the sale or other disposition and your
adjusted tax basis in the shares of stock. This gain or loss will be capital
gain or loss if you have held the stock as a capital asset, and will be
long-term capital gain or loss if you have held the stock for more than one
year. In general, if you are a U.S. stockholder and you recognize loss upon the
sale or other disposition of stock that you have held for six months or less,
the loss you recognize will be treated as a long-term capital loss to the extent
you received distributions from us which were required to be treated as
long-term capital gains.
BACKUP WITHHOLDING
We report to our U.S. stockholders and the Internal Revenue Service the
amount of dividends paid during each calendar year, and the amount of any tax
withheld. Under the backup withholding rules, a stockholder may be subject to
backup withholding at the rate of 31% with respect to dividends paid unless the
holder is a corporation or comes within other exempt categories and, when
required, demonstrates this fact, or provides a taxpayer identification number
or social security number, certifies as to no loss of exemption from backup
withholding, and otherwise complies with applicable requirements of the backup
withholding rules. A U.S. stockholder that does not provide us with his correct
taxpayer identification number or social security number may also be subject to
penalties imposed by the Internal Revenue Service. Backup withholding is not an
additional tax. Any amount paid as backup withholding will be creditable against
the stockholder's income tax liability. In addition, we may be required to
withhold a portion of capital gain distributions to any stockholders who fail to
certify their non-foreign status.
TAXATION OF TAX-EXEMPT STOCKHOLDERS
The Internal Revenue Service has ruled that amounts distributed as dividends
by a REIT do not constitute unrelated business taxable income when received by a
tax-exempt entity. Based on that ruling, provided that a tax-exempt stockholder,
has not held its shares as "debt financed property" within the meaning of the
Internal Revenue Code and the shares are not otherwise used in a unrelated trade
or business, dividend income on our stock and income from the sale of our stock
should not be unrelated business taxable income to a tax-exempt stockholder.
Generally, debt financed property is property, the acquisition or holding of
which was financed through a borrowing by the tax-exempt stockholder.
For tax-exempt stockholders which are social clubs, voluntary employee
benefit associations, supplemental unemployment benefit trusts, and qualified
group legal services plans exempt from Federal income taxation under Sections
501(c)(7), (c)(9), (c)(17) and (c)(20) of the Internal Revenue Code,
respectively, income from an investment in our shares will constitute unrelated
business taxable income unless the organization is able to properly claim a
deduction for amounts set aside or placed in reserve for certain purposes so as
to offset the income generated by its investment in our shares. These
prospective investors should consult their tax advisors concerning these "set
aside" and reserve requirements.
Notwithstanding the above, however, a portion of the dividends paid by a
"pension-held REIT" may be treated as unrelated business taxable income as to
any pension trust which:
- is described in Section 401(a) of the Internal Revenue Code;
- is tax-exempt under Section 501(a) of the Internal Revenue Code; and
- holds more than 10%, by value, of the interests in the REIT.
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Tax-exempt pension funds that are described in Section 401(a) of the
Internal Revenue Code are referred to below as "qualified trusts."
A REIT is a "pension held REIT" if:
- it would not have qualified as a REIT but for the fact that Section
856(h)(3) of the Internal Revenue Code provides that stock owned by a
qualified trust is treated, for purposes of the 5/50 Rule, as owned by the
beneficiaries of the trust, rather than by the trust itself; and
- either at least one qualified trust holds more than 25%, by value, of the
interests in the REIT, or one or more qualified trusts, each of which owns
more than 10%, by value, of the interests in the REIT, holds in the
aggregate more than 50%, by value, of the interests in the REIT.
The percentage of any REIT dividend treated as unrelated business taxable
income is equal to the ratio of:
- the unrelated business taxable income earned by the REIT, treating the
REIT as if it were a qualified trust and therefore subject to tax on
unrelated business taxable income, to
- the total gross income of the REIT.
A DE MINIMIS exception applies where the percentage is less than 5% for any
year. As a result of the limitations on the transfer and ownership of stock
contained in the charter, we do not expect to be classified as a "pension-held
REIT."
TAXATION OF NON-U.S. STOCKHOLDERS
The rules governing Federal income taxation of nonresident alien
individuals, foreign corporations, foreign partnerships, and other foreign
stockholders (collectively, "non-U.S. stockholders") are complex and no attempt
will be made herein to provide more than a summary of such rules.
PROSPECTIVE NON-U.S. STOCKHOLDERS SHOULD CONSULT THEIR TAX ADVISORS TO
DETERMINE THE IMPACT OF FOREIGN, FEDERAL, STATE, AND LOCAL INCOME TAX LAWS WITH
REGARD TO AN INVESTMENT IN OUR SECURITIES AND OF OUR ELECTION TO BE TAXED AS A
REAL ESTATE INVESTMENT TRUST INCLUDING ANY REPORTING REQUIREMENTS.
Distributions to non-U.S. stockholders that are not attributable to gain
from sales or exchanges by us of U.S. real property interests and are not
designated by us as capital gain dividends or retained capital gains will be
treated as dividends of ordinary income to the extent that they are made out of
our current or accumulated earnings and profits. Such distributions will
generally be subject to a withholding tax equal to 30% of the distribution
unless an applicable tax treaty reduces or eliminates that tax. However, if
income from an investment in our stock is treated as effectively connected with
the non-U.S. stockholder's conduct of a U.S. trade or business, the non-U.S.
stockholder generally will be subject to Federal income tax at graduated rates,
in the same manner as U.S. stockholders are taxed with respect to such
distributions (and also may be subject to the 30% branch profits tax in the case
of a non-U.S. stockholder that is a corporation). We expect to withhold U.S.
income tax at the rate of 30% on the gross amount of any distributions made to a
non-U.S. stockholder unless (i) a lower treaty rate applies and any required
form, such as IRS Form 1001 or IRS Form W-8BEN, evidencing eligibility for that
reduced rate is filed by the non-U.S. stockholder with us or (ii) the non-U.S.
stockholder files an IRS Form 4224 or IRS Form W-8ECI with us claiming that the
distribution is effectively connected income.
Any portion of the dividends paid to non-U.S. stockholders that is treated
as excess inclusion from a real estate mortgage investment conduit income will
not be eligible for exemption from the 30% withholding tax or a reduced treaty
rate. In addition, if Treasury regulations are issued allocating our
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excess inclusion income from non-real estate mortgage investment conduits among
our stockholders, some percentage of the our dividends would not be eligible for
exemption from the 30% withholding tax or a reduced treaty withholding tax rate
in the hands of non-U.S. stockholders.
Distributions in excess of our current and accumulated earnings and profits
will not be taxable to a stockholder to the extent that such distributions do
not exceed the adjusted basis of the stockholder's stock, but rather will reduce
the adjusted basis of such shares. To the extent that distributions in excess of
current and accumulated earnings and profits exceed the adjusted basis of a
non-U.S. stockholder's stock, such distributions will give rise to tax liability
if the non-U.S. stockholder would otherwise be subject to tax on any gain from
the sale or disposition of its stock, as described below. Because it generally
cannot be determined at the time a distribution is made whether or not such
distribution will be in excess of current and accumulated earnings and profits,
the entire amount of any distribution normally will be subject to withholding at
the same rate as a dividend. However, amounts so withheld are refundable to the
extent it is subsequently determined that such distribution was, in fact, in
excess of our current and accumulated earnings and profits. We are also required
to withhold 10% of any distribution in excess of our current and accumulated
earnings and profits. Consequently, although we intend to withhold at a rate of
30% on the entire amount of any distribution, to the extent that we do not do
so, any portion of a distribution not subject to withholding at a rate of 30%
will be subject to withholding at a rate of 10%.
For any year in which we qualify as a REIT, distributions that are
attributable to gain from sales or exchanges of a U.S. real property interest,
which includes certain interests in real property, but generally does not
include mortgage loans or mortgage backed securities, will be taxed to a
Non-U.S. stockholder under the provisions of the Foreign Investment in Real
Property Tax Act of 1980 ("FIRPTA"). Under FIRPTA, distributions attributable to
gain from sales of U.S. real property interests are taxed to a non-U.S.
stockholder as if such gain were effectively connected with a U.S. business.
Non-U.S. stockholders thus would be taxed at the normal capital gain rates
applicable to U.S. stockholders (subject to applicable alternative minimum tax
and a special alternative minimum tax in the case of nonresident alien
individuals). Distributions subject to FIRPTA also may be subject to the 30%
branch profits tax in the hands of a non-U.S. stockholder that is a corporation.
We are required to withhold 35% of any distribution that is designated by us as
a U.S. real property capital gains dividend. The amount withheld is creditable
against the non-U.S. stockholder's FIRPTA tax liability.
Gain recognized by a non-U.S. stockholder upon a sale of our stock generally
will not be taxed under FIRPTA if we are a "domestically controlled REIT," which
is a REIT in which at all times during a specified testing period less than 50%
in value of the stock was held directly or indirectly by non-U.S. persons.
Although we currently believe that we are a "domestically controlled REIT,"
because our stock is publicly traded, no assurance can be given that we are or
will remain a "domestically controlled REIT." Even if we do not qualify as a
"domestically controlled REIT," a non-U.S. stockholder that owns, actually or
constructively, 5% or less of our stock throughout a specified testing period
will not recognize taxable gain on the sale of his stock under FIRPTA if the
shares are traded on an established securities market.
Gain not subject to FIRPTA will be taxable to a non-U.S. stockholder if (i)
the non-U.S. stockholder's investment in the stock is effectively connected with
a U.S. trade or business, in which case the non-U.S. stockholder will be subject
to the same treatment as U.S. stockholders with respect to such gain, or (ii)
the non-U.S. stockholder is a nonresident alien individual who was present in
the U.S. for 183 days or more during the taxable year and other conditions are
met, in which case the nonresident alien individual will be subject to a 30% tax
on the individual's capital gains. If the gain on the sale of the stock were to
be subject to taxation under FIRPTA, the non-U.S. stockholder would be subject
to the same treatment as U.S. stockholders with respect to such gain (subject to
applicable alternative minimum tax, a special alternative minimum tax in the
case of nonresident alien individuals, and the possible application of the 30%
branch profits tax in the case of non-U.S. corporations).
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STATE, LOCAL AND FOREIGN TAXATION
We may be required to pay state, local and foreign taxes in various state,
local and foreign jurisdictions, including those in which we transact business
or make investments, and our stockholders may be required to pay state, local
and foreign taxes in various state, local and foreign jurisdictions, including
those in which they reside. Our state, local and foreign tax treatment may not
conform to the Federal income tax consequences summarized above. In addition,
your state, local and foreign tax treatment may not conform to the Federal
income tax consequences summarized above. Consequently, you should consult your
tax advisor regarding the effect of state, local and foreign tax laws on an
investment in our securities.
POSSIBLE LEGISLATIVE OR OTHER ACTIONS AFFECTING REITS.
The rules dealing with Federal income taxation are constantly under review
by persons involved in the legislative process and by the Internal Revenue
Service and the U.S. Treasury Department. Changes to the tax law, which may have
retroactive application, could adversely affect us and our investors. It cannot
be predicted whether, when, in what forms, or with what effective dates, the tax
law applicable to us or our investors will be changed.
PLAN OF DISTRIBUTION
We may sell common stock, preferred stock or any series of debt securities
being offered by this prospectus in one or more of the following ways from time
to time:
- to underwriters for resale to the public or to institutional investors;
- directly to institutional investors; or
- through agents to the public or to institutional investors.
The prospectus supplements will describe the terms of the offering of the
securities, including the name or names of any underwriters or agents, the
purchase price of such securities and the proceeds to us from such sale, any
underwriting discounts or agency fees and other item's constituting
underwriters' or agents' compensation, any initial public offering price, any
discounts or concessions allowed or reallowed or paid to dealers and any
securities exchanges on which such securities may be listed.
If underwriters are used in the sale, the securities will be acquired by the
underwriters for their own account and may be resold from time to time in one or
more transactions, including negotiated transactions, at a fixed public offering
price or prices, which may be changed, at market prices prevailing at the time
of sale, at prices related to such prevailing market prices or at negotiated
prices.
Unless a prospectus supplement states otherwise, the obligations of the
underwriters to purchase any series of securities will be subject to certain
conditions precedent and the underwriters will be obligated to purchase all of
such series of securities, if any are purchased.
Underwriters and agents may be entitled under agreements entered into with
us to indemnification by us against certain civil liabilities, including
liabilities under the Securities Act of 1933, or to contribution with respect to
payments which the underwriters or agents may be required to make. Underwriters
and agents may be customers of, engage in transactions with, or perform services
for us and our affiliates in the ordinary course of business.
Each series of securities will be a new issue of securities and will have no
established trading market other than the common stock which is listed on the
NYSE. Any common stock sold pursuant to a prospectus supplement will be listed
on the NYSE, subject to official notice of issuance. Any underwriters to whom we
sell securities for public offering and sale may make a market in the
securities, but such underwriters will not be obligated to do so and may
discontinue any market making
27
<PAGE>
at any time without notice. The securities, other than the common stock, may or
may not be listed on a national securities exchange.
LEGAL OPINIONS
Some legal matters relating to the securities offered hereby will be passed
upon for us by Skadden, Arps, Slate, Meagher & Flom LLP. Certain legal matters
relating to Maryland law relating to the validity of the securities being
offered by this prospectus are being passed upon for us by Miles & Stockbridge
P.C.
EXPERTS
Our financial statements incorporated in this Prospectus by reference from
our Annual Report on Form 10-K for the period from March 24, 1998 (commencement
of operations) through December 31, 1998 have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their report, which is incorporated
herein by reference, and have been so incorporated in reliance upon the report
of such firm given upon their authority as experts in accounting and auditing.
28
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses to be borne by the registrant in
connection with the offerings described in this Registration Statement. All such
expenses other than the Securities and Exchange Commission registration fee are
estimates.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee............... $ 55,600
Transfer Agents, Trustees and Depositary's Fees and Expenses...... 10,000
Printing and Engraving Fees and Expenses.......................... 25,000
Accounting Fees and Expenses...................................... 10,000
Legal Fees........................................................ 75,000
Rating Agency Fees................................................ 10,000
Miscellaneous (including Listing Fees, if applicable)............. 4,400
---------
Total........................................................... $ 190,000
---------
---------
</TABLE>
- ------------------------
* To be completed by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As permitted by the MGCL, the registrant's Charter obligates it to indemnify
its present and former directors and officers and the Manager and its employees,
officers, directors and controlling persons and to pay or reimburse reasonable
expenses for such persons in advance of the final disposition of a proceeding to
the maximum extent permitted from time to time by Maryland law. The MGCL permits
a corporation to indemnify its present and former directors and officers, among
others, against judgments, penalties, fines, settlements and reasonable expenses
actually incurred by them in connection with any proceeding to which they may be
made a party by reason of their service in those or other capacities, unless it
is established that (a) the act or omission of the director or officer was
material to the matter giving rise to such proceeding and (i) was committed in
bad faith, or (ii) was the result of active and deliberate dishonesty, (b) the
director or officer actually received an improper personal benefit in money,
property or services, or (c) in the case of any criminal proceeding, the
director or officer had reasonable cause to believe that the act or omission was
unlawful. The registrant's Bylaws implement the provisions relating to
indemnification contained in its Charter. The MCGL permits the charter of a
Maryland corporation to include a provision limiting the liability of its
directors and officers to the corporation and its stockholders for money
damages, except to the extent that (i) the person actually received an improper
benefit or profit in money, property or services, or (ii) a judgment or other
final adjudication is entered in a proceeding based on a finding that the
person's action, or failure to act, was the result of active and deliberate
dishonesty and was material to the cause of action adjudicated in the
proceeding. The registrant's Charter contains a provision providing for
elimination of the liability of its directors or officers to it or its
stockholders for money damages to the maximum extent permitted by Maryland law
from time to time. In addition, the registrant's officers, directors, and
controlling persons are indemnified against certain liabilities by the
registrant under the Underwriting Agreement relating to this Offering. The
registrant will maintain for the benefit of its officers and directors,
officers' and directors' insurance.
II-1
<PAGE>
ITEM 16. EXHIBITS
The following is a list of all exhibits filed as a part of this Registration
Statement on Form S-3, including those incorporated herein by reference.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ----------- ---------------------------------------------------------------------------------------------------------
<C> <S>
1.1 The form of Underwriting Agreement will be filed as an exhibit to a Current Report of the Registrant on
Form 8-K and incorporated herein by reference.
4.1 Form of Senior Indenture.+
4.2 Form of Subordinated Indenture.+
4.3 The form of any Senior Note with respect to each particular series of Senior Notes issued hereunder will
be filed as an exhibit to a Current Report of the Registrant on Form 8-K and incorporated herein by
reference.
4.4 The form of any Subordinated Note with respect to each particular series of Subordinated Notes issued
hereunder will be filed as an exhibit to a Current Report of the Registrant on Form 8-K and incorporated
herein by reference.
4.5 The form of any articles supplementary with respect to any preferred stock issued hereunder will be filed
as an exhibit to a Current Report of the Registrant on Form 8-K and incorporated herein by reference.
4.6 The form of Warrant Agreement with respect to any warrant served hereunder will be filed as an exhibit to
a Current Report of the Registrant on Form 8-K and incorporated herein by reference.
4.7 The form of any warrant with respect to each series of warrants will be filed as an exhibit to a Current
Report of the Registrant on Form 8-K and incorporated herein by reference.
5.1 Opinion of Miles & Stockbridge P.C.
12.1 Statement re: Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Deloitte & Touche LLP, Independent Accountants.
23.2 Consent of Miles & Stockbridge P.C. (included in Exhibit 5.1).
24.1 Power of Attorney of certain officers and directors of Anthracite.+
25.1 Statement of Eligibility on Form T-1 under the Trust Indenture Act of 1939, as amended, of ,
as Trustee under the Senior Indenture will be filed as an exhibit to a Current Report of the Registrant
on Form 8-K and incorporated herein by reference.
25.2 Statement of Eligibility on Form T-1 under the Trust Indenture Act of 1939, as amended, of ,
as Trustee under the Subordinated Indenture will be filed as an exhibit to a Current Report of the
Registrant on Form 8-K and incorporated herein by reference.
</TABLE>
- ------------------------
+ Filed previously.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include any material
information with respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such information in the
registration statement,
II-2
<PAGE>
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned Registrant hereby further undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions set forth in Item 15, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under subsection
(a) of Section 310 of the Trust Indenture Act in accordance with the rules and
regulations prescribed by the Commission under Section 305(b)(2) of the Act.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Anthracite
Capital, Inc. certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement or amendment thereto to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, in the State of
New York on September 22, 1999.
ANTHRACITE CAPITAL, INC.
By /s/ RICHARD M. SHEA
-----------------------------------------
Name: Richard M. Shea
Title: Chief Operating Officer and Chief
Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
*
- ------------------------------ Chairman of the Board September 22, 1999
Laurence D. Fink
President and Chief
* Executive Officer and
- ------------------------------ Director (Principal September 22, 1999
Hugh R. Frater Executive Officer)
Chief Operating Officer and
/s/ RICHARD M. SHEA Chief Financial Officer
- ------------------------------ (Principal Financial September 22, 1999
Richard M. Shea Officer and Principal
Accounting Officer)
*
- ------------------------------ Director September 22, 1999
Donald G. Drapkin
*
- ------------------------------ Director September 22, 1999
Carl Guether
*
- ------------------------------ Director September 22, 1999
Jeffrey C. Keil
*
- ------------------------------ Director September 22, 1999
Kendrick R. Wilson, III
<TABLE>
<S> <C> <C> <C>
*By: /s/ RICHARD M. SHEA
------------------------- Attorney-in-fact September 22, 1999
Richard M. Shea
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
1.1 The form of Underwriting Agreement will be filed as an exhibit to a Current Report of the Registrant on
Form 8-K and incorporated herein by reference.
4.1 Form of Senior Indenture.+
4.2 Form of Subordinated Indenture.+
4.3 The form of any Senior Note with respect to each particular series of Senior Notes issued hereunder will
be filed as an exhibit to a Current Report of the Registrant on Form 8-K and incorporated herein by
reference.
4.4 The form of any Subordinated Note with respect to each particular series of Subordinated Notes issued
hereunder will be filed as an exhibit to a Current Report of the Registrant on Form 8-K and incorporated
herein by reference.
4.5 The form of any articles supplementary with respect to any preferred stock issued hereunder will be
filed as an exhibit to a Current Report of the Registrant on Form 8-K and incorporated herein by
reference.
4.6 The form of Warrant Agreement with respect to any warrant issued hereunder will be filed as an exhibit
to a Current Report of the Registrant on Form 8-K and incorporated herein by reference.
4.7 The form of any warrant with respect to each series of warrants will be filed as an exhibit to a Current
Report of the Registrant on Form 8-K and incorporated herein by reference.
5.1 Opinion of Miles & Stockbridge P.C.
12.1 Statement re: Computation of Ratio of Earnings to Fixed Charges.
23.1 Consent of Deloitte & Touche LLP, Independent Accountants.
23.2 Consent of Miles & Stockbridge P.C. (included in Exhibit 5.1).
24.1 Power of Attorney of certain officers and directors of Anthracite.+
25.1 Statement of Eligibility on Form T-1 under the Trust Indenture Act of 1939, as amended, of ,
as Trustee under the Senior Indenture will be filed as an exhibit to a Current Report of the Registrant
on Form 8-K and incorporated herein by reference.
25.2 Statement of Eligibility on Form T-1 under the Trust Indenture Act of 1939, as amended, of ,
as Trustee under the Subordinated Indenture will be filed as an exhibit to a Current Report of the
Registrant on Form 8-K and incorporated herein by reference.
</TABLE>
- ------------------------
+ Filed previously.
<PAGE>
Exhibit 5.1
[Letterhead of Miles & Stockbridge P.C.]
September 22, 1999
Anthracite Capital, Inc.
345 Park Avenue, 29th Floor
New York, New York 10154
Ladies and Gentlemen:
We have acted as special Maryland counsel to Anthracite Capital, Inc.,
a Maryland corporation (the "Company"), in connection with the registration of
certain securities of the Company (the "Offered Securities") on its Registration
Statement on Form S-3 (Registration No. 333-75473, the "Registration Statement")
filed by the Company with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to (i)
shares of the Company's common stock, $.001 par value per share (the "Common
Shares"), (ii) shares of the Company's preferred stock, $.001 par value per
share (the "Preferred Shares"), (iii) senior debt securities (the "Senior Debt
Securities"), (iv) subordinated debt securities (the "Subordinated Debt
Securities"), and (v) warrants to purchase Common Shares or Preferred Shares
(the "Warrants"), all of which may be issued from time to time on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act at an aggregate
public offering price not to exceed $200,000,000.
We have examined the Registration Statement, including the exhibits
thereto, and such other documents, corporate records, laws and regulations as we
have deemed necessary for the purposes of giving the opinions set forth in this
opinion letter. Based upon that examination and subject to the assumptions and
qualifica tions set forth herein, we are of the opinion that:
1. With respect to the Common Shares, when (i) the Common Shares have
been duly authorized by the Company's Board of Directors, (ii) the Registration
Statement has become effective under the Securities Act, (iii) the terms of the
sale of the Common Shares have been duly established in conformity with the
Company's charter (the "Charter") and its bylaws (the "Bylaws"), which terms do
not violate any applicable law or result in a default under or breach of any
agreement or instrument
<PAGE>
binding on the Company and comply with any requirement or restriction imposed by
any court or governmental body having jurisdiction over the Company, and (iv)
the Common Shares have been issued and sold as contemplated by the Registration
Statement and consideration therefor has been received by the Company, the
Common Shares will be legally issued, fully paid and nonassessable.
2. With respect to the Preferred Shares, when (i) the Preferred Shares
have been duly authorized by the Company's Board of Directors, (ii) the
Registration Statement has become effective under the Securities Act, (iii)
appropriate articles supplementary to the Charter relating to a class or series
of the Preferred Shares to be sold under the Registration Statement (in each
such case, "Articles Supplementary") have been duly adopted by the Board of
Directors and such Articles Supplementary have been filed with and accepted for
record by the State Department of Assessments and Taxation of the State of
Maryland, (iv) the terms of issuance and sale of shares of such class or series
of Preferred Shares have been duly established in conformity with the Charter
and the Bylaws, which terms do not violate any applicable law or result in a
default under or breach of any agreement or instrument binding upon the Company
and comply with any requirement or restriction imposed by any court or
governmental body having jurisdiction over the Company, and (v) shares of such
class or series of Preferred Shares have been duly issued and sold as
contemplated by the Registration Statement and consideration therefor has been
received by the Company, such Preferred Shares will be legally issued, fully
paid and nonassessable.
3. With respect to the Warrants, when (i) the Registration Statement
has become effective under the Securities Act, (ii) a warrant agreement (the
"Warrant Agreement") relating to the Warrants has been duly authorized, executed
and delivered and the Warrants and the securities of the Company into which the
War rants will be exercisable have been duly authorized by the Company's Board
of Directors, (iii) the terms of the Warrants and of their issuance and sale
have been duly established in conformity with the Charter, the Bylaws and the
Warrant Agree ment, which terms do not violate any applicable law or result in a
default under or breach of any agreement or instrument binding upon the Company
and comply with any requirement or restriction imposed by any court or
governmental body having jurisdiction over the Company, and (iv) the Warrants
have been duly executed and countersigned in accordance with the Warrant
Agreement and issued and sold as contemplated by the Registration Statement and
consideration therefor has been received by the Company, the Warrants will
constitute valid and legally binding obligations of the Company, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
other laws relating to or affecting creditors' rights and to general principles
of equity.
4. With respect to the Senior Debt Securities and the Subordinated Debt
Securities (in either case, the "Debt Securities"), when (i) the Registration
Statement
2
<PAGE>
becomes effective under the Securities Act, (ii) an indenture (the "Indenture")
relating to the Debt Securities has been duly authorized, executed and delivered
and the Debt Securities have been duly authorized by the Company's Board of
Directors, (iii) the terms of the Debt Securities and of their issuance have
been duly established in conformity with the Charter, the Bylaws and the
Indenture, which terms do not violate any applicable law or result in a default
under or breach of any agreement or instrument binding upon the Company and
comply with any requirement or restric tion imposed by any court or governmental
body having jurisdiction over the Company, and (iv) the Debt Securities have
been duly executed and countersigned in accordance with the Indenture and issued
and sold as contemplated by the Registra tion Statement and consideration
therefor has been received by the Company, the Debt Securities will constitute
valid and legally binding obligations of the Company, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and other laws
relating to or affecting creditors' rights and to general principles of equity.
With respect to the issuance of Warrants to purchase Common Shares or
Preferred Shares, we have assumed (i) that the Company will have authorized but
unissued, and will reserve for issuance upon exercise of the Warrants, a
sufficient number of Common Shares or Preferred Shares, and (ii) that the
Warrant Agreement will be duly authorized, executed and delivered by the warrant
agent to be named therein. With respect to the issuance of Common Shares or
Preferred Shares or of Warrants to purchase Common Shares or Preferred Shares
and the securities into which the Warrants are exercisable, we have assumed that
any issuance thereof will not violate or otherwise conflict with any provisions
of the Charter imposing ownership limitations on shares of the capital stock of
the Company or otherwise relating to its qualification as a real estate
investment trust. With respect to the issuance of the Debt Securities, we have
assumed (i) that the Indenture will be duly authorized, executed and delivered
by the trustee to be named therein (the "Trustee"), and (ii) that the Trustee
will comply with the applicable provisions of the Securities Act in connection
with its obligations under the Indenture. Further, the opinions set forth herein
are based on the assumptions that (i) at the time of issuance of any of the
Offered Securities the Company will be in good standing under the laws of the
State of Maryland and (ii) the aggregate purchase price paid for any Offered
Securities, as well as any other Offered Securities theretofore issued, does not
exceed $200,000,000.
We have relied as to certain matters on information obtained from
public officials and officers of the Company. We express no opinion with respect
to the laws of, or the effect or applicability of the laws of, any jurisdiction
other than the laws of the State of Maryland.
3
<PAGE>
We hereby consent to the use of our name under the heading "Legal
Matters" in the Prospectus forming a part of the Registration Statement and to
the filing of this opinion letter with the Registration Statement as Exhibit 5.1
thereto. In giving our consent, we do not thereby admit that we are in the
category of persons whose consent is required under Section 7 of the Securities
Act or the rules and regulations of the Securities and Exchange Commission
thereunder. The opinion expressed herein is limited to the matters set forth in
this letter and no other opinion should be inferred beyond the matters expressly
stated.
Very truly yours,
Miles & Stockbridge P.C.
By: /s/ J.W. Thompson Webb
-----------------------
Principal
4
<PAGE>
Exhibit 12.1
For the Period
March 24, 1998 Six months
through ended
December 31, 1998 June 30, 1999
----------------- -------------
Net Income (loss) (1,389) 13,931
Add:
Interest Expense 23,478 9,634
Non Recurring Loss 18,262
Trading strategy loss 58
Less:
Trading strategy gain (1,372)
--------- ---------
Earnings as adjusted 40,409 22,193
Fixed Charges (interest expense) 23,478 9,634
Ratio of earnings to fixed charges 1.72 2.30
<PAGE>
EXIHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement No. 333-75473 of
Anthracite Capital, Inc. on Form S-3 of our report dated March 17, 1999 which
is incorporated by reference within such Registration Statement.
We also consent to the reference to us under the heading "Experts" in the
Prospectus.
/s/ Deloitte & Touche LLP
New York, New York
September 20, 1999
