ANTHRACITE
345 PARK AVENUE, NEW YORK, NY 10154
April 17, 2000
Dear Fellow Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend
the Annual Meeting of Stockholders of Anthracite Capital, Inc. to be held
at One Seaport Plaza, New York, New York, on Monday, May 22, 2000, at 10
a.m. Eastern Time. The matters to be considered by stockholders at the
Annual Meeting are described in detail in the accompanying materials.
IT IS VERY IMPORTANT THAT YOU BE REPRESENTED AT THE ANNUAL MEETING
REGARDLESS OF THE NUMBER OF SHARES YOU OWN OR WHETHER YOU ARE ABLE TO
ATTEND THE ANNUAL MEETING IN PERSON. Let me urge you to mark, sign and date
your proxy card today and to return it in the envelope provided, even if
you plan to attend the Annual Meeting. This will not prevent you from
voting in person, but will ensure that your vote is counted if you are
unable to attend.
Your continued support of and interest in Anthracite Capital, Inc.
are sincerely appreciated.
Sincerely,
/s/ Laurence D. Fink
--------------------
Laurence D. Fink
Chairman
ANTHRACITE
345 PARK AVENUE, NEW YORK, NY 10154
ANTHRACITE CAPITAL, INC. ("AHR")
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
- ---------------------------------------------------------------------------
TO BE HELD ON MAY 22, 2000
To the Stockholders of Anthracite Capital, Inc.:
NOTICE IS HEREBY GIVEN, that the 2000 annual meeting of stockholders
(the "Annual Meeting") of Anthracite Capital, Inc. (the "Company") will be
held at One Seaport Plaza, New York, New York, on Monday, May 22, 2000, at
10 a.m., Eastern Time, for the following purposes:
1. To elect three Directors to serve on the Board of Directors for a
three-year term and until their successors have been duly elected and
qualified;
2. To ratify the appointment by the Board of Directors of Deloitte &
Touche LLP as the independent auditors of the Company for the fiscal
year ending December 31, 2000;
3. To approve the issuance of the Company's common stock upon
conversion of shares of the Company's 10% Series B Cumulative
Convertible Redeemable Preferred Stock (the "Series B Preferred Stock")
in the event that the Series B Preferred Stock is issued pursuant to an
agreement and plan of merger (the "Merger Agreement") between the
Company, Anthracite Acquisition Corporation, a Delaware corporation and
a wholly owned subsidiary of the Company and CORE Cap, Inc., a Delaware
Corporation ("CORE Cap").
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Only stockholders of the Company of record as of the close of business
on March 31, 2000 will be entitled to notice of, and to vote at, the Annual
Meeting or any adjournments thereof.
Further information regarding the Annual Meeting, nominees for
election as Directors, independent auditors and other matters is contained
in the enclosed Proxy Statement.
By order of the Board of Directors
/s/ Robert L. Friedberg,
--------------------
Robert L. Friedberg,
Secretary
New York, New York
April 17, 2000
- -----------------------------------------------------------------------------
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING IN PERSON
OR BY PROXY; IF YOU DO NOT EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE,
DATE, SIGN AND RETURN THE APPROPRIATE ENCLOSED PROXY OR PROXIES IN THE
ACCOMPANYING ENVELOPE PROVIDED FOR YOUR CONVENIENCE, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES.
- -----------------------------------------------------------------------------
ANTHRACITE CAPITAL, INC.
345 PARK AVENUE, 29TH FLOOR
NEW YORK, NEW YORK 10154
----------------
PROXY STATEMENT
----------------
ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement and the accompanying Form of Proxy and Notice of
Annual Meeting are provided in connection with the solicitation of proxies
by the Board of Directors of Anthracite Capital, Inc., a Maryland
corporation (the "Company"), for use at the annual meeting of stockholders
to be held at One Seaport Plaza, New York, New York, on Monday, May 22,
2000, at 10 a.m., Eastern Time (the "Annual Meeting") and any adjournments
thereof. The mailing address of the Company is 345 Park Avenue, New York,
New York 10154. This Proxy Statement, the accompanying Proxy Card and the
Notice of Annual Meeting are first being mailed to holders of the Company's
common stock on or about April 17, 2000.
MATTERS TO BE CONSIDERED AT THE MEETING
At the Annual Meeting, holders of the Company's common stock, par
value $0.001 per share (the "Common Stock"), will vote upon (i) the
election of three Directors to serve on the Board of Directors; (ii) the
ratification of the appointment by the Board of Directors of Deloitte &
Touche LLP as the independent auditors of the Company for the fiscal year
ending December 31, 2000; (iii) the issuance of the Company's common stock
upon the conversion of shares of the Company's Series B Preferred Stock,
and (iv) such other business as may properly come before the meeting or any
adjournment thereof.
RECORD DATE
The Board of Directors has fixed the close of business on March 31,
2000 as the record date for the determination of stockholders entitled to
notice of and to vote at the Annual Meeting. At the close of business on
March 31, 2000, the Company had outstanding 20,955,434 shares of Common
Stock. Each share of Common Stock entitles its holder to one vote.
VOTING AT THE MEETING
If the enclosed proxy is properly executed and returned to the Company
in time to be voted at the Annual Meeting, it will be voted as specified on
the proxy, unless it is properly revoked prior thereto. If no specification
is made on the proxy as to any one or more of the proposals, the shares
represented by the proxy will be voted as follows:
FOR the election of each of the Director nominees;
FOR the ratification of the appointment of Deloitte & Touche LLP as
the independent auditors of the Company for the fiscal year ending
December 31, 2000; and
FOR the issuance of the Company's common stock upon conversion of
shares of the Company's Series B Preferred Stock.
A majority of the votes entitled to be cast at the Annual Meeting,
represented in person or by proxy, constitutes a quorum for purposes of
transacting business at the Annual Meeting. The election of each nominee
for Director will require the affirmative vote of the holders of a
plurality of the votes cast on such proposal. The minimum vote which will
constitute shareholder approval for the issuance of common stock upon
conversion of the Series B Preferred Stock is over 50% in interest of all
securities entitled to vote on the proposal. The ratification of the
independent auditors and any other matters submitted to a vote of the
stockholders will be determined by a majority of the votes cast at the
Annual Meeting.
Under the rules of the New York Stock Exchange, brokers who hold
shares in"street name" may have the authority to vote on certain matters
when they do not receive instructions from beneficial owners. Brokers that
do not receive instructions are entitled to vote on the election of
Directors and the ratification of the independent auditors. In determining
whether the proposal to elect Directors or to ratify the appointment of the
independent auditors has received the requisite vote, abstentions and
broker non-votes will be disregarded and will have no effect on the outcome
of the vote. A vote "withheld" from a Director nominee will have the effect
of a negative vote for such proposal since a plurality of the votes cast at
the Annual Meeting is required for the election of each Director.
PROXIES
The Company will bear the cost of the solicitation of proxies,
including the charges and expenses of brokerage firms and others who
forward solicitation material to beneficial owners of Common Stock. In
addition to the use of the mails, proxies may be solicited by personal
interview, telephone or other means deemed appropriate by the Board of
Directors.
A person giving the enclosed proxy has the power to revoke it at any
time before it is exercised by (i) attending the Annual Meeting and voting
in person, (ii) duly executing and delivering a proxy bearing a later date,
or (iii) sending written notice of revocation to the Company's Secretary at
345 Park Avenue, New York, New York 10154.
RECOMMENDATIONS FOR THE BOARD OF DIRECTORS
The Board of Directors recommends a vote FOR each of the nominees for
Director, FOR the ratification of the appointment of Deloitte & Touche LLP
as the independent auditors of the Company for the fiscal year ending
December 31, 2000, and FOR the issuance of the Company's common stock upon
conversion of the Company's Series B Preferred Stock.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Board of Directors is comprised of seven members
classified in three groups. Members of each group serve a three-year term.
At the Annual Meeting, three Directors will be elected to the class of
Directors whose terms expire at the close of the 2003 Annual Meeting of
Stockholders. The shares represented by the enclosed proxy will be voted
for the election as Directors of the three nominees named below, unless a
vote is withheld from any of the three individual nominees. If any nominee
becomes unavailable or unwilling to serve the Company as a Director for any
reason, the persons named as proxies in the accompanying Proxy Card are
expected to consult with management of the Company in voting the shares
represented by them. The Board of Directors has no reason to doubt the
availability of any nominee, and each has indicated his willingness to
serve as a Director of the Company if elected by the stockholders at the
Annual Meeting. The three nominees receiving the highest number of votes
cast on such proposal at the meeting will be elected.
INFORMATION CONCERNING THE DIRECTOR NOMINEES
The Board of Directors has unanimously proposed Laurence D. Fink,
Kendrick R. Wilson and Andrew P. Rifkin as nominees for election as
Directors of the Company. The present terms of Messrs. Fink, Wilson and
Rifkin expire upon the close of the 2000 Annual Meeting of Stockholders.
The Company has no Nominating Committee, but instead the entire Board of
Directors acts in such capacity. The Board of Directors does not have any
policy with respect to consideration of nominees recommended by the
security holders.
The Board of Directors recommends a vote FOR each of the nominees for
Director.
INFORMATION CONCERNING THE INCUMBENT DIRECTORS AND DIRECTOR NOMINEES
Information concerning the names, ages, terms, positions with the
Company and business experience of the members of the Board of Directors,
is set forth below. Mr. Fink was elected to the Board of Directors in
November 1997. Mr. Frater was elected in February 1998, and Mr. Rifkin was
elected in December 1999. Except for Messrs. Frater, Fink and Rifkin, each
other Director has served continuously with the Company since his first
election in March 1998.
<TABLE>
<CAPTION>
DIRECTOR TERM
NAME AGE POSITION EXPIRES (1)
- ---------------------------------------------------------------------------------------------------------------------
INSIDE DIRECTORS:
<S> <C> <C> <C>
Laurence D. Fink 47 Chairman of the Board of Directors 2000
Hugh R. Frater 44 President, Chief Executive Officer and Director 2002
UNAFFILIATED DIRECTORS:
Donald G. Drapkin (3) 52 Director 2001
Carl F. Geuther (2) 53 Director 2001
Jeffrey C. Keil (2) (3) 56 Director 2002
Andrew P. Rifkin 40 Director 2000
Kendrick R. Wilson, III (2) (3) 53 Director 2000
- ----------------------------------
1. The Company's Directors are classified into three groups, each elected
on a staggered basis for three-year terms.
2. Member of Audit Committee.
3. Member of Compensation Committee. Mr. Fink was a member of the
Compensation Committee until December 31, 1998, when he was replaced
by Mr. Wilson.
</TABLE>
LAURENCE D. FINK, Chairman, is also Chairman and Chief Executive Officer of
BlackRock Financial Management, Inc. (the "Manager" or "BlackRock"),
Chairman of the Management Committee and Co-Chair of the Investment
Strategy Group. In addition, Mr. Fink serves on the Asset Liability
Committee of PNC Bank. He is also Chairman of the Board and a Director of
BlackRock's family of closed-end mutual funds, and a Director of
BlackRock's offshore funds, BlackRock Asset Investors, BlackRock MQE
Investors and BlackRock Fund Investors I, II and III. Prior to founding
BlackRock in 1988, Mr. Fink was a member of the Management Committee and a
Managing Director of The First Boston Corporation. Mr. Fink joined The
First Boston Corporation in 1976 and served as co-head of its Taxable Fixed
Income Division and head of its Mortgage and Real Estate Products Group.
Mr. Fink is currently a member of the Boards of Trustees of Mount Sinai New
York University Medical Center and Health System, Dwight-Englewood School
in Englewood, New Jersey, the National Outdoor Leadership School (NOLS) and
Phoenix House, and a Director of Nexell Therapeutics, Inc. and Innovir
Laboratories, Inc. Mr. Fink earned a B.A. degree in political science from
the University of California at Los Angeles in 1974 and an M.B.A. degree
with a concentration in real estate from U.C.L.A. in 1976.
HUGH R. FRATER, President and Chief Executive Officer, is a Managing
Director and a member of the Management Committee of the Manager, where he
was co-head of the BlackRock Account Management Group. Mr. Frater's primary
responsibilities included developing investment products and marketing
investment services for BlackRock's Institutional Asset Management clients.
Prior to joining BlackRock in 1988, Mr. Frater was a Vice President in
Investment Banking at Lehman Brothers in the financial institutions
department. Mr. Frater earned a B.A. degree in English from Dartmouth
College in 1978 and an M.B.A. degree in finance from Columbia University in
1985.
DONALD G. DRAPKIN, has been a Director and Vice Chairman of MacAndrews &
Forbes Holdings Inc. and various of its affiliates since 1987. Prior to
joining MacAndrews & Forbes, Mr. Drapkin was a partner in the law firm of
Skadden, Arps, Slate, Meagher & Flom for more than five years. Mr. Drapkin
is also a Director of the following corporations which file reports
pursuant to the Securities Exchange Act: Algos Pharmaceutical Corporation,
BlackRock Asset Investors, The Molson Companies Limited, Nexell
Therapeutics Inc., Playboy Enterprises, Inc., Revlon Consumer Products
Corporation, Revlon, Inc., The Warnaco Group, Inc. and Weider Nutrition
International Inc. On December 27, 1996, Marvel, Marvel Holdings, Marvel
Parent and Marvel III, of which Mr. Drapkin was a Director on such date,
and several subsidiaries of Marvel filed voluntary petitions for
reorganization under Chapter 11 of the United States Bankruptcy Code.
CARL F. GEUTHER, is a former Executive Vice President and Chief Financial
Officer of WMC Mortgage Corp., a mortgage banking company. Mr. Geuther had
been Vice Chairman and Chief Financial Officer, and previously Executive
Vice President, of Great Western Financial Corporation and Great Western
Bank since 1987. Mr. Geuther had joined Great Western following its
acquisition of Aristar, Inc., a consumer finance and insurance company in
1983, where he served as Executive Vice President and Chief Financial
Officer and previous financial management positions since 1974. He received
an M.B.A. from Lehigh University in 1968 and a B.A. from Ursinus College in
1967.
JEFFREY C. KEIL, has been Chairman of the Executive Committee of
International Real Returns, LLC, investment advisor to an investment
company organized by Lazard Freres & Co., since January 1998. From 1996 to
January 1998, Mr. Keil was a General Partner of Keil Investment Partners, a
private fund which invested in the financial sector in Israel. From 1984 to
1996, Mr. Keil was President, Director and Chairman of the Finance
Committee of Republic New York Corporation and Vice Chairman and a Member
of the Executive Committee of Republic National Bank of New York. Mr. Keil
earned a B.S. degree in economics at the University of Pennsylvania in
1965, pursued graduate studies in mathematical statistics, operations
research and international economics from the London School of Economics,
and earned an M.B.A. degree with a concentration in Finance from Harvard
Graduate School of Business Administration in 1968.
ANDREW P. RIFKIN, Mr. Rifkin is a Managing Director at Donaldson, Lufkin &
Jenrette. Mr. Rifkin is responsible for the acquisition efforts of DLJ's
Real Estate Capital Partners, a $2 billion dollar real estate opportunity
fund sponsored by Donaldson, Lufkin & Jenrette. DLJ Real Estate Capital
Partners has been an active investor in a broad range of real estate
related opportunities including both debt and equity in the domestic and
international markets. Prior to joining DLJ in 1995, Mr. Rifkin was a Vice
President at Goldman, Sachs, & Co. in the Real Estate Principal Investment
Area, where his responsibilities included asset management for various
Whitehall portfolios. Mr. Rifkin graduated with honors from the State
University of New York at Binghamton with a B.S. in Mathematics and
received a M.S. in Computer Science from Cornell University.
KENDRICK R. WILSON, III, has been a Managing Director of Goldman Sachs &
Co. in the Financial Institutions Group since 1998. From 1989 to 1998, Mr.
Wilson was Vice Chairman and member of the Management Committee of Lazard
Freres & Co. Mr. Wilson is a director of Celanese AG and American Marine
Holdings Corp. Mr. Wilson is also a Director of the following corporations
which file reports pursuant to the Exchange Act: BlackRock Asset Investors,
BlackRock Fund Investors I, II, and III. He is a Trustee of the Montana
Land Reliance, Middlebury College and the Hospital for Special Surgery. Mr.
Wilson received an M.B.A. from Harvard Business School and a B.A. from
Dartmouth College.
UNAFFILIATED DIRECTORS
The Articles require that a majority of the Company's Directors shall
be "Unaffiliated Directors." "Unaffiliated Director" means any Director who
(a) does not own greater than a de minimis interest in the Manager or any
of its affiliates, other than the Company and any person controlled by the
Company, and who (b) within the last two years has not directly or
indirectly (i) been an officer of or employed by the Company or the Manager
or any of their affiliates, (ii) been a Director of the Manager or any of
its affiliates other than the Company and any person controlled by the
Company, (iii) performed more than a de minimis amount of services for the
Manager or any of its affiliates or (iv) had any material business or
professional relationship with the Manager or any of its affiliates other
than as a Director of the Company or any person controlled by the Company.
There are presently five Unaffiliated Directors.
COMPENSATION OF DIRECTORS
Directors are elected for a term of three years, and hold office until
their successors are elected and qualified. All officers serve at the
discretion of the Company's Board of Directors. Although the Company may in
the future have salaried employees, it currently has no such employees. The
Company pays an annual director's fee to each unaffiliated Director of
$20,000, a fee of $1,000 for each meeting of the Board of Directors
attended by each Unaffiliated Director and reimbursement of costs and
expenses of all Directors for attending such meetings. Affiliated Directors
will not be separately compensated by the Company other than through the
Company's stock option plan.
BOARD AND COMMITTEE MEETINGS
The Audit Committee, composed of Messrs. Geuther, Keil and Wilson,
makes recommendations to the Board of Directors concerning the selection of
independent auditors, reviews the financial statements of the Company and
considers such other matters in relation to the internal and external audit
of the financial affairs of the Company as may be necessary or appropriate
to facilitate accurate and timely financial reporting. The Audit Committee
met one time during the fiscal year ended December 31, 1999.
The Compensation Committee of the Board of Directors, composed of
Messrs, Wilson (who assumed the position previously filled by Mr. Fink),
Drapkin and Keil, administers the Company's 1998 Stock Option Plan, reviews
all aspects of compensation of the Company's officers and makes
recommendations on such matters to the full Board of Directors. The
Compensation Committee met one time during the fiscal year ended December
31, 1999.
During the fiscal year ended December 31, 1999, the Board of Directors
of the Company met on seven occasions. Five of our seven Directors attended
75% or more of the meetings of the Board and of the Board committees on
which they served. Each Director attended 50% or more of the meetings of
the Board and of the Board committees on which he served. The Company is
not aware of any Director who attended fewer than 69% of the aggregate of:
(1) the total number of meetings of the Board of Directors (held during the
period for which he has been a Director); and (2) the total number of
meetings held by all committees of the board on which he served (during the
periods that he served).
The Company currently has no Nominating Committee.
EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
executive officers of the Company who are not also Directors. For
information concerning Hugh R. Frater, see "Information Concerning the
Directors."
<TABLE>
<CAPTION>
NAME AGE POSITION
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Richard M. Shea 40 Chief Operating Officer and Chief Financial Officer
Edwin O. Bergman 34 Vice President
Robert L. Friedberg 39 Vice President and Secretary
Chris A. Milner 33 Vice President
Mark S. Warner 38 Vice President
</TABLE>
Because the Manager maintains principal responsibility for managing
the affairs of the Company, the Company does not employ full-time personnel
and the officers listed above perform only ministerial functions as
officers of the Company, such as executing contracts and filing reports
with regulatory agencies. Notwithstanding the foregoing, the persons listed
above, who are officers of the Manager and will be compensated by the
Manager, are expected in their capacities as officers of the Manager,
fulfilling duties of the Manager under the Management Agreement, to devote
a substantial amount of their time to the affairs of the Company. As
officers of the Manager, such persons will not have fiduciary obligations
to the Company and its stockholders.
RICHARD M. SHEA, ESQ., Chief Operating Officer and Chief Financial Officer,
is a Managing Director of the Manager. Prior to joining BlackRock in 1993,
Mr. Shea was an Associate Vice President and tax counsel at Prudential
Securities, Inc. Mr. Shea joined Prudential in 1988 and was responsible for
corporate tax planning, tax-oriented investment strategies and tax issues
of CMOs and original issue discount obligations. Mr. Shea earned a B.S.
degree, in accounting from the State University of New York at Plattsburgh
in 1981 and a J.D. degree from New York Law School in 1984.
EDWIN O. BERGMAN, Vice President - Risk Management, is also a Director in
BlackRock's Risk Management and Analytics group. Since joining BlackRock in
October 1996, Mr. Bergman has performed a variety of functions throughout
the Risk Management area. Prior to working at BlackRock, Mr. Bergman worked
as an associate in Booz, Allen & Hamilton's Financial Services and
Technology Practice. Prior to working at Booz, Allen & Hamilton, Mr.
Bergman was a Vice President in Goldman, Sachs & Co.'s Mortgage Research
area from December 1992 to February 1995. Mr. Bergman was a Senior
Associate at Morgan Stanley from July 1987 to December 1992. Mr. Bergman
received a B.A. in Economics and the Natural Sciences from The Johns
Hopkins University in May of 1987 with departmental honors in Economics.
ROBERT L. FRIEDBERG, CPA, Vice President and Secretary, is also a Vice
President of the Manager. Prior to joining Blackrock in 1999, Mr. Friedberg
was Treasurer of Vornado Realty Trust, where he was responsible for
corporate and property finance. Mr. Friedberg joined Vornado in 1997. Prior
to working at Vornado Realty Trust, Mr. Friedberg was Managing Director at
Crown Northcorp, Inc. a rated special servicer of Commercial Mortgage
Backed Securities. Prior to working at Crown Northcorp, Inc., Mr. Friedberg
was Vice President at Amresco from 1991 to 1995. Mr. Friedberg earned a BBA
degree in Accounting at George Washington University in 1982 and received
his Certified Public Accountants license in 1994.
CHRIS A. MILNER, is a Director at BlackRock, Inc. and a Vice President of
Anthracite Capital, Inc. Mr. Milner is a member of BlackRock's Mortgage
Investment Strategy Group and an advisor to PNC's Real Estate Executive
Committee, which serves as the management committee for all commercial real
estate activities at PNC and Midland Loan Services. Prior to joining
BlackRock in 1997, Mr. Milner was Vice President & Manager - PNC Real
Estate Capital Markets where he was responsible for origination,
underwriting and securitization of all commercial mortgage conduit
production. Mr. Milner joined PNC in 1990 upon completion of his graduate
work (M.B.A. magna cum laude in Finance with a concentration in Real
Estate) at Indiana University. Mr. Milner earned a liberal arts B.A. degree
from DePauw University in 1988.
MARK S. WARNER, CFA, Vice President, is a Director and portfolio manager of
the Manager, where his primary responsibility is managing client
portfolios, specializing in the commercial mortgage and non-agency
residential mortgage sectors. Prior to joining BlackRock in 1993, Mr.
Warner was a Director in the Capital Markets Unit of the Prudential
Mortgage Capital Company. Mr. Warner joined Prudential in 1987. Mr. Warner
earned a B.A. degree in Political Science from Columbia University in 1983
and an M.B.A. degree in Finance and Marketing from Columbia Business School
in 1987. Mr. Warner received his Chartered Financial Analyst (CFA)
designation in 1993.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
STOCK BENEFICIALLY OWNED BY PRINCIPAL STOCKHOLDERS
The following table sets forth the beneficial ownership of the
Company's Common Stock, as of March 31, 1999, by any person (including any
"group" as that term is used in Section 13(d)(3) of the Exchange Act who is
known to the Company to be the beneficial owner of more than five percent
of the issued and outstanding shares of Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME & ADDRESS OF COMMON STOCK PERCENT OF CLASS
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Merrill Lynch & Co., Inc. ("ML&Co.") (on behalf of Merrill 2,113,000 10.08%
Lynch Asset Management Group ("AMG")) (1)
World Financial Center, North Tower
250 Vesey Street
New York, NY 10381
FBR Asset Investment Corporation 1,581,846 7.55%
1001 19th Street North
Arlington, VA 22209-1710
James Grosfeld & Nancy Grosfeld, joint tenants 1,371,800 6.55%
20500 Civic Center Drive
Suite 3000
Southfield, MI 40876
Oppenheimer Funds, Inc. 912,800 4.36%
Two World Trade Center, Suite 3400
New York, NY 10048-0203
- -------------------------
1. Based on information contained in Amendment No. 1 to Schedule 13G,
dated February 4, 2000: (i) ML&Co. through AMG, its wholly owned
subsidiary, and Merrill Lynch Global Allocation Fund, Inc. have
beneficial ownership and shared voting power over 1,972,900 shares;
and (ii) ML&Co. has beneficial ownership over an additional 140,100
shares.
</TABLE>
STOCK BENEFICIALLY OWNED BY DIRECTORS, DIRECTOR NOMINEES AND OFFICERS
The following table sets forth the beneficial ownership of the
Company's Common Stock, as of March 20, 2000, by (i) each Director and
Director nominee of the Company, (ii) each executive officer of the
Company, and (iii) all Directors and executive officers as a group. Unless
otherwise indicated, such shares of Common Stock are owned directly and the
indicated person has sole voting and investment power.
Number of Shares
of Common Stock Percent
Name Beneficially Owned (1) of Class
Laurence D. Fink 57,922 *
Hugh R. Frater 211,000 *
Donald G. Drapkin 10,745 *
Carl F. Geuther 10,745 *
Jeffrey C. Keil 10,745 *
Andrew P. Rifkin 0 *
Kendrick R. Wilson, III 10,745 *
Richard M. Shea 118,650 *
Robert L. Friedberg 0 *
Edwin O. Bergman 61,000 *
Chris A. Milner 118,000 *
Mark S. Warner 60,500 *
All Directors, Director nominees
and executive officers
as a group (11 persons) 661,552 3.20%
- ------------
* Less than 1%.
1. Includes shares issuable upon the exercise of options that are
currently exercisable or that will become exercisable within 60 days
of March 20, 2000. Such shares are held as follows: Mr. Fink (17,922);
Mr. Frater (150,000); Mr. Drapkin (10,000); Mr. Geuther (10,000); Mr.
Keil (10,000); Mr. Wilson (10,000); Mr. Shea (115,000); Mr. Bergman
(57,500); Mr. Milner (112,500); and Mr. Warner (57,500). Shares
issuable upon the exercise of options that are currently exercisable
or that will become exercisable within 60 days are treated as
outstanding for purposes of computing the percentage of outstanding
shares. To the Company's knowledge, all directors and executive
officers of the Company have sole voting and investment power with
respect to the shares of Common Stock held by them.
EXECUTIVE COMPENSATION
During 1999 and 1998, the Company did not pay any cash compensation to
its executive officers but may, in the future, pay annual compensation to
the Company's executive officers for their services as executive officers.
The Company may from time to time, at the discretion of the Compensation
Committee of the Board of Directors, grant options to purchase shares of
the Company's Common Stock to the executive officers pursuant to the 1998
Stock Option Plan.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
There was no grant of stock options to the Company's chief executive
officer during the last fiscal year.
EXERCISE OF OPTIONS AND STOCK APPRECIATION RIGHTS
The following table sets forth information concerning the exercise of
stock options during the last fiscal year by the Company's chief executive
officer and the fiscal year-end value of his unexercised options.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR, AND FY-END OPTION/SAR VALUES
Number of Securities Underlying Value of Unexercised In-the-Money
Unexercised Options/SARs at FY-End Options/SARS at FY-End (1) ($)
(#)
Shares
Acquired Value
Name on Exercise (#) Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Hugh R. Frater 0 0 75,000 225,000 0 0
(1) The fair market value of a share of common stock on December 31, 1999
was 6-3/8, which corresponds to its closing price on the New York
Stock Exchange.
</TABLE>
STOCK OPTIONS
On March 23, 1998, the Company adopted a stock option plan (the "1998
Stock Option Plan") that provides for the grant of both qualified incentive
stock options ("ISOs") that meet the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended, and non-qualified stock options,
stocks appreciation rights and dividend equivalent rights. Stock options
may be granted to the Manager, directors, officers and any key employees of
the Company, directors, officers and key employees of the Manager and to
any other individual or entity performing services for the Company. The
exercise price for any qualified option granted under the 1998 Stock Option
Plan may not be less than 100% of the fair market value of the shares of
Common Stock at the time the option is granted. The purpose of the 1998
Stock Option Plan is to provide a means of performance-based compensation
to the Manager in order to attract and retain qualified personnel and to
provide an incentive to others whose job performance affects the Company.
As of December 31, 1999, net of terminated options, the Company
granted options to purchase up to 1,718,143 shares of Common Stock,
predominantly to Directors and executive officers of the Company.
Subject to anti-dilution provisions for stock splits, stock dividends
and similar events, the 1998 Stock Option Plan authorizes the grant of
options to purchase an aggregate of 2,470,453 shares of the Company's
Common Stock. If an option granted under the 1998 Stock Option Plan expires
or terminates, the shares subject to any unexercised portion of that option
will again become available for the issuance of further options under the
1998 Stock Option Plan. Unless previously terminated by the Board of
Directors, the 1998 Stock Option Plan will terminate ten years from its
effective date, and no options may be granted under the 1998 Stock Option
Plan thereafter.
The 1998 Stock Option Plan is administered by a committee of the Board
of Directors comprised entirely of Unaffiliated Directors (the
"Compensation Committee"). Options granted under the 1998 Stock Option Plan
become exercisable in accordance with the terms of the grant made by the
Compensation Committee. The Compensation Committee has discretionary
authority to determine at the time an option is granted whether it is
intended to be an ISO or a non-qualified option, and when and in what
increments shares of Common Stock covered by the option may be purchased.
If stock options are to be granted to the Unaffiliated Directors, then the
full Board of Directors will approve such grants.
Under current law, ISOs may not be granted to any director of the
Company who is not also a full-time employee or to directors, officers and
other employees of entities unrelated to the Company. In addition, no
options may be granted under the 1999 Stock Option Plan to any person who,
assuming exercise of all options held by such person, would own or be
deemed to own more than 9.8% of the outstanding shares of Common Stock of
the Company.
Each option must terminate no more than ten years from the date it is
granted. Options may be granted on terms providing that they will be
exercisable in whole or in part at any time or times during their
respective terms, or only in specified percentages at stated time periods
or intervals during the term of the option.
The exercise price of any option granted under the 1998 Stock Option
Plan is payable in full (i) by cash, (ii) by surrender of shares of the
Company's Common Stock having a market value equal to the aggregate
exercise price of all shares to be purchased, (iii) by cancellation of
indebtedness owed by the Company to the option holder, (iv) by any
combination of the foregoing, or (v) by a full recourse promissory note
executed by the option holder. The terms of the promissory note may be
changed from time to time by the Company's Board of Directors to comply
with applicable regulations or other relevant pronouncements of the
Internal Revenue Service or the Securities and Exchange Commission ("SEC").
The Company's Board of Directors may, without affecting any
outstanding options, from time to time revise or amend the 1998 Stock
Option Plan, and may suspend or discontinue it at any time. However, no
such revision or amendment may increase the number of shares of Common
Stock subject to the 1998 Stock Option Plan (with the exception of
adjustments resulting from changes in capitalization), change the class of
participants eligible to receive options granted under the 1998 Stock
Option Plan or modify the period within which or the terms stated in the
1998 Stock Option Plan upon which the options may be exercised without
stockholder approval.
THE MANAGER
The Manager is a wholly owned subsidiary of BlackRock, Inc., which is
listed for trading on the New York Stock Exchange ("NYSE") under the symbol
"BLK". BlackRock, Inc. is 70% owned by PNC Bank, National Association,
which is itself a wholly owned subsidiary of PNC Bank Corp (NYSE: PNC).
Established in 1988, the Manager is a registered investment adviser under
the Investment Advisers Act of 1940, as amended and is one of the largest
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.
COMPLIANCE WITH SECTION 16(A) OF THE
SECURITIES EXCHANGE ACT OF 1934
Under federal securities laws, the Company's Directors and executive
officers, and any persons beneficially owning more than ten percent of a
registered class of the Company's equity securities, are required to report
their ownership of the Common Stock and any changes in that ownership to
the SEC. These persons are also required to furnish the Company with copies
of these reports. Specific due dates for these reports have been
established, and the Company is required to report in the Proxy Statement
any failure to timely file such reports by those due dates during the 1999
fiscal year.
To the Company's knowledge, based solely upon review of copies of such
reports furnished to the Company and written representations from the
Company's Directors and executive officers that no other reports were
required, the Company believes that all of these filing requirements were
satisfied by the Company's Directors and executive officers during 1999.
PROPOSAL 2
RATIFICATION OF INDEPENDENT AUDITORS
PROPOSED INDEPENDENT AUDITOR
Deloitte & Touche LLP has served as independent auditors of the
Company and its subsidiary for the fiscal year ended December 31, 1999. The
Audit Committee of the Board of Directors has appointed Deloitte & Touche
LLP, independent certified public accountants, to be the Company's
independent auditors for the fiscal year ending December 31, 2000 and has
further directed that the selection of the auditors be submitted for
ratification by the stockholders at the Annual Meeting.
A representative of Deloitte & Touche LLP will be present at the
Annual Meeting, will be given the opportunity to make a statement, if he so
desires, and will be available to respond to appropriate questions from
stockholders.
RECOMMENDATION BETWEEN ANTHRACITE AND THE MANAGER
The Board of Directors recommends a vote FOR the ratification of the
appointment of Deloitte & Touche LLP as the independent auditors for the
Company for the fiscal year ending December 31, 2000.
PROPOSAL 3
ISSUANCE OF COMMON STOCK UPON CONVERSION OF SERIES B PREFERRED STOCK
The Company has entered into a Merger Agreement with CORE Cap
under which CORE Cap will become a wholly-owned subsidiary of the Company,
common stockholders of CORE Cap will receive shares of the Company's common
stock in aggregate less than 20% of the shares currently outstanding and
holders of CORE Cap's Cumulative Convertible Series A Preferred Stock will
receive shares of the Company's newly-designated 10% Series B Cumulative
Convertible Preferred Stock ("Series B Preferred Stock").
Because the potential issuance of shares of common stock upon
conversion of the new Series B Preferred Stock would result in the issuance
of a number of shares of common stock in excess of 20% of the outstanding
capital stock of the Company, the Series B Preferred Stock is not currently
convertible.
Under the Merger Agreement, we agreed to submit to our common
stockholders the proposal to reserve shares of our common stock for
potential issuance in order to permit the conversion feature of the Series
B Preferred Stock to go into effect. If, following shareholder approval, we
provide for the conversion feature of the Series B Preferred Stock, the
dividend rate on the stock will be fixed at 10% per annum. If shareholders
do not approve the reservation of shares for potential issuance upon the
conversion of the new Series B Preferred Stock, the Series B Preferred
Stock will not be convertible but the dividend rate on the stock will
increase by .5% during each twelve month period following June 15, 2000
until the conversion feature is approved.
While the exact conversion price for conversion of the Series B
Preferred Stock will not be fixed until consummation of the merger, we
currently estimate that the conversion price will be in excess of
approximately $17. As of April 4, 2000, the closing sales price of the
Company's common stock was $6.81.
Therefore, the Board of Directors recommends a vote FOR issuance
of common stock upon conversion of the Series B Preferred Stock.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATIONSHIP BETWEEN ANTHRACITE AND THE MANAGER
BlackRock Financial Management, Inc. (the "Manager" or "BlackRock") is
a wholly owned subsidiary of BlackRock, Inc. (NYSE: BLK). BlackRock, Inc.
is 70% owned by PNC Bank, National Association ("PNC Bank"), which is
itself a wholly owned subsidiary of PNC Bank Corp. The Manager, subject to
the supervision of the Board of Directors, is responsible for the
day-to-day operations of the Company pursuant to a Management Agreement.
The following table summarizes all compensation, fees and other benefits
(including reimbursement of out-of-pocket expenses) that the Manager may
earn or receive under the terms of the Management Agreement. These rates
have not changed after the approval of the extended terms.
<TABLE>
<CAPTION>
RECIPIENT PAYOR AMOUNT
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Manager Company Base management fee equal to a percentage of the average invested
assets by rating category of the Company (1)
Manager Company Incentive compensation based on the amount, if any, by which the
Company's Funds from Operations and certain net gains exceed a hurdle
rate
Manager Company Out-of-pocket expenses of Manager paid to third parties (2)
- ------------------------
(1) The base management fee is equal to 1% per annum of average invested
assets rated less than BB- or not rated, 0.75% of average invested
assets rated BB- through BB+, and 0.35% of average invested assets
rated above BB+.
(2) The Manager may engage PNC Bank, Midland Loan Services, Inc.
("Midland"), a wholly owned subsidiary of PNC Bank, or unaffiliated
third parties to conduct due diligence with respect to potential
portfolio investments and to provide certain other services.
Accordingly, a portion of the out-of-pocket expenses may be paid to
PNC Bank or Midland in such capacities. The Company's guidelines
require the contract for such engagement to be conducted at arm's
length, as evidenced by documentation provided by the Manager to the
Board of Directors. PNC Bank and Midland are paid fees and
out-of-pocket expenses as would customarily be paid to unaffiliated
third parties for such services.
</TABLE>
The base management fee is intended to compensate the Manager for its
costs in providing management services to the Company. The Board of
Directors of the Company may adjust the base management fee with the
consent of the Manager in the future if necessary to align the fee more
closely with the costs of such services.
The Manager will be entitled to receive incentive compensation for
each fiscal quarter in an amount equal to the product of (A) 25% of the
dollar amount by which (1)(a) Funds From Operations of the Company (before
the incentive fee) per share of Common Stock (based on the weighted average
number of shares outstanding) plus (b) gains (or minus losses) from debt
restructuring and sales of property per share of Common Stock (based on the
weighted average number of shares outstanding), exceed (2) an amount equal
to (a) the weighted average of the price per share of the initial offering
and the prices per share of any secondary offerings by the Company
multiplied by (b) the Ten-Year U.S. Treasury Rate plus three and one-half
percent per annum (expressed as a quarterly percentage) multiplied by (B)
the weighted average number of shares of Common Stock outstanding during
such quarter. Notwithstanding the foregoing, accrual and payment of any
portion of the incentive compensation that is attributable to net capital
gains of the Company will be delayed to the extent, if any, required by the
Investment Advisors Act of 1940, as amended. "Funds From Operations" as
defined by the National Association of Real Estate Investment Trusts
("NAREIT") means net income computed in accordance with generally accepted
accounting principles ("GAAP") excluding gains (or losses) from debt
restructuring and sales of property, plus depreciation and amortization on
real estate assets, and after adjustments for unconsolidated partnerships
and joint ventures. Funds From Operations does not represent cash generated
from operating activities in accordance with GAAP and should not be
considered as an alternative to net income as an indication of the
Company's performance or to cash flows as a measure of liquidity or ability
to make distributions. As used in calculating the Manager's compensation,
the term "Ten-Year U.S. Treasury Rate" means the arithmetic average of the
weekly average yield to maturity for actively traded current coupon U.S.
Treasury fixed interest rate securities (adjusted to constant maturities of
ten years) published by the Federal Reserve Board during a quarter, or if
such rate is not published by the Federal Reserve Board, any Federal
Reserve Bank or agency or department of the federal government selected by
the Company.
For the years ended December 31, 1999 and December 31, 1998, the
Company paid the Manager $4,565 and $3,474 in base management fees and no
incentive compensation. In accordance with the provisions of the Management
Agreement, the Company recorded reimbursements to the Manager of $333 and
$250 for certain expenses incurred on behalf of the Company by the Manager
during 1999 and 1998.
RELATIONSHIP BETWEEN THE MANAGER AND ANTHRACITE'S DIRECTORS AND EXECUTIVE
OFFICERS
In addition to being Chairman of the Board of Directors of the
Company, Laurence D. Fink is Chairman of the Board and Chief Executive
Officer of the Manager. Hugh R. Frater is Managing Director of the Manager
as well as President and Chief Executive Officer of the Company. Richard M.
Shea is a Managing Director of the Manager in addition to his position as
Chief Operating Officer and Chief Financial Officer of the Company.
Similarly, each of the Company's executive officers also serves as an
officer of the Manager.
OTHER MATERIAL TRANSACTIONS BETWEEN ANTHRACITE AND THE MANAGER
None
PERFORMANCE GRAPH
The following graph compares the change in the Company's stockholder
cumulative total return on the Common Stock for the period March 24, 1998,
which was the first day the Company's Common Stock traded on the NYSE,
through December 31, 1999, with the changes in the Standard & Poor's 500
Stock Price Index (the "S&P 500"), the Standard & Poor's 500 REIT Index
(the "S&P REIT") and the Nasdaq Composite Index ("NASDAQ"), for the same
period, assuming an investment of $100 for the Common Stock and each index,
for comparative purposes. Total return equals appreciation in stock price
plus dividends paid, and assumes that all dividends are reinvested. The
information herein has been obtained from sources believed to be reliable,
but neither its accuracy nor its completeness is guaranteed. The
performance graph is not necessarily indicative of future investment
performance.
FINANCIAL STATEMENTS
The Company will furnish, without charge, a copy of the Company's most
recent Annual Report to any stockholder upon request, provided such Annual
Report is not enclosed herein. Written requests should be directed to 345
Park Avenue, New York, New York 10154. Telephone requests should be
directed to 212-409-3333.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
The Board of Directors will provide for the presentation of proposals
by stockholders at the 2001 annual meeting of stockholders, provided that
such proposals are submitted by eligible stockholders who have complied
with the relevant regulations of the SEC regarding stockholder proposals.
Stockholder proposals intended to be submitted for presentation at the 2001
annual meeting of stockholders of the Company must be in writing and must
be delivered to the Secretary of the Company at its executive offices by
personal delivery or United States mail no later than March 21, 2001 and no
earlier than February 21, 2001 for inclusion in the Company's proxy
statement and the form of proxy relating to the 2001 annual meeting. A
stockholder's notice to the Secretary shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (i) a brief
description of the business desired to be brought before the annual meeting
(including the specific proposal to be presented) and the reasons for
conducting such business at the annual meeting, (ii) the name and record
address of the stockholder proposing such business, (iii) the class and
number of shares of the Company that are beneficially owned by the
stockholder, and (iv) any material interest of the stockholder in such
business.
OTHER MATTERS
The Board of Directors knows of no other business to be brought before
the Annual Meeting. If any other matters properly comes before the Annual
Meeting, the proxies will be voted on such matters in accordance with the
judgment of the persons named as proxies therein, or their substitutes,
present and acting at the meeting.
No person is authorized to give any information or to make any
representation not contained in this Proxy Statement, and, if given or
made, such information or representation should not be relied upon as
having been authorized. This Proxy Statement does not constitute the
solicitation of a proxy, in any jurisdiction, from any person to whom it is
unlawful to make such proxy solicitation in such jurisdiction. The delivery
of this Proxy Statement shall not, under any circumstances, imply that
there has not been any change in the information set forth herein since the
date of the Proxy Statement.
By Order of the Board of Directors
/s/ Laurence D. Fink
--------------------
Laurence D. Fink
Chairman
New York, New York
April 17, 2000
