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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)*
Capstead Mortgage Corporation
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
14067 E 10 0
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(CUSIP Number)
Bracebridge Capital With a copy to:
Ms. Nancy G. Zimmerman Scott M. Zimmerman, Esq.
Fixed Income Associates, Inc. Swidler Berlin Shereff Friedman, LLP
1000 Massachusetts Avenue 405 Lexington Avenue
Cambridge, Massachusetts 02138 New York, New York 10174
(617) 349-2000 (212) 973-0111
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
January 25, 2000
---------------------------------------
(Date of Event which Requires Filing of
this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
statement because of Rule 13d-1(e), (f) or (g), check the following: [ ].
Note: One copy and an EDGAR version of this statement, including all exhibits,
should be filed with the Commission. See Rule 13d-7(b) for other parties to whom
copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
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CUSIP No. 14067 E 10 0 Page 2 of 12 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Fixed Income Associates, Inc.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[X]
(b)[ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
NUMBER OF
SHARES --------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,641,132
EACH --------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH --------------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,641,132
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,641,132
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.5%
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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SCHEDULE 13D
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CUSIP No. 14067 E 10 0 Page 3 of 12 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Bracebridge Capital, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[X]
(b)[ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
NUMBER OF
SHARES --------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,641,132
EACH --------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH --------------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,641,132
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,641,132
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.5%
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14 TYPE OF REPORTING PERSON*
PN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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SCHEDULE 13D
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CUSIP No. 14067 E 10 0 Page 4 of 12 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Bracebridge Capital LLC
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[X]
(b)[ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Massachusetts
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7 SOLE VOTING POWER
NUMBER OF
SHARES --------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 544,518
EACH --------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH --------------------------------------------------------
10 SHARED DISPOSITIVE POWER
544,518
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
544,518
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
1.2%
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14 TYPE OF REPORTING PERSON*
00
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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SCHEDULE 13D
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CUSIP No. 14067 E 10 0 Page 5 of 12 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Nancy G. Zimmerman
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a)[X]
(b)[ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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7 SOLE VOTING POWER
NUMBER OF
SHARES --------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 1,641,132
EACH --------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON
WITH --------------------------------------------------------
10 SHARED DISPOSITIVE POWER
1,641,132
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,641,132
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.5%
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14 TYPE OF REPORTING PERSON*
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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SCHEDULE 13D
This Amendment No. 2 to the Statement on Schedule 13D (as defined
below) amends and supplements the Statement on Schedule 13D relating to the
event date of December 10, 1999 (the "Schedule 13D") and Amendment No. 1 to the
Schedule 13D relating to the event date of December 27, 1999, filed by Fixed
Income Associates, Inc., a Delaware corporation ("FIA"), Bracebridge Capital,
L.P. ("BCLP"), a Delaware limited partnership of which FIA is the general
partner, Bracebridge Capital LLC ("BCLLC"), a Massachusetts limited liability
company of which FIA is the managing member, and Nancy G. Zimmerman, the sole
shareholder of FIA ("Zimmerman" and together with FIA, BCLP and BCLLC, the
"Reporting Persons") relating to the common stock (the "Common Stock") of
Capstead Mortgage Corporation (the "Issuer"). Capitalized terms used and not
defined herein shall have the meanings assigned thereto in the Schedule 13D.
The business address of each FIA, BCLP, BCLLC and Zimmerman is 1000
Massachusetts Avenue, Cambridge, MA 02138. The address of the Issuer is 8401
North Central Expressway, Suite 800, Dallas, Texas 75225.
ITEM 3. SOURCE AND AMOUNT OF FUNDS
Item 3 is hereby amended to add the following:
Since December 30, 1999, FIFI II L.P. ("FIFI"), a Delaware limited
partnership of which BCLP is the general partner, purchased an aggregate of
107,100 shares of Cumulative Convertible Preferred Stock, Series B of the
Company (the "Series B Shares") at an aggregate cost of $1,016,249 using its own
funds. The Series B Shares are convertible into 80,721 shares of Common Stock.
See Item 5.
ITEM 4. PURPOSE OF TRANSACTION
Item 4 is hereby amended by replacing the last paragraph of Item 4 with
the following:
Attached hereto as Exhibit B are certain letters from Bracebridge
Capital to the Chairman of the Board of Directors of the Company addressing
certain concerns and requesting certain additional information with respect to
the recently announced series of transactions between the Company and an
affiliate of Fortress Investment Group LLC.
Attached hereto as Exhibit C is a shareholder proposal and supporting
statement, detailing a proposed program of liquidation and distribution, sent by
FIFI to the Company to be submitted for shareholder vote at the upcoming
special meeting of the holders of the Company's Common Stock.
Except for the foregoing, no Reporting Person has any present plans or
proposals which relate to or would result in any of the actions or events
described in paragraphs (a) through
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(j) of Item 4 of Schedule 13D. However, the Reporting Persons retain their
respective rights to modify their plans with respect to the transactions
described in this Item 4, to acquire or dispose of securities of the Company and
to formulate plans and proposals that could result in the occurrence of any such
events, subject to applicable laws and regulations.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
Item 5 is hereby amended and restated in its entirety as follows:
(a) and (b)
BCLP, as the general partner of FIFI, has the power to vote and to
direct the voting of and the power to dispose and direct the disposition of the
1,096,614 shares of Common Stock deemed to be owned by FIFI. Accordingly, BCLP
may be deemed to be the beneficial owner of 1,096,614 shares of Common Stock, or
2.4% of the outstanding shares of Common Stock.
BCLP and BCLLC, as the sole directors of FFI, have the power to vote
and direct the voting of and power to dispose and direct the disposition of the
544,518 shares of Common Stock deemed to be owned by FFI. Accordingly, BCLP and
BCLLC may together be deemed to be the beneficial owner of 544,518 shares of
Common Stock, or 1.2% of the outstanding shares of Common Stock.
As the General Partner of BCLP, FIA has the power to vote and to direct
the voting of and the power to dispose and direct the disposition of the
1,096,614 shares of Common Stock deemed to be owned by FIFI. As the General
Partner of BCLP and the managing member of BCLLC, FIA has the power to vote and
to direct the disposition of the 544,518 shares of Common Stock deemed to be
beneficially owned by FFI.
As the sole shareholder of FIA, Zimmerman may be deemed to have the
power to vote and to direct the voting of and power to dispose and direct the
disposition of the 1,096,614 shares of Common Stock deemed to be beneficially
owned by FIFI and the 544,518 shares of Common Stock owned by FFI. Accordingly,
Zimmerman may be deemed to be the beneficial owner of 1,641,132 shares of Common
Stock, or 3.5% of the outstanding shares of Common Stock.
The number of shares beneficially owned by each of the Reporting
Persons and the percentage of outstanding shares represented thereby, have been
computed in accordance with Rule 13d-3 under the Securities Exchange Act of
1934, as amended. The percentage ownership of the Reporting Persons is based on
46,235,875 outstanding shares of Common Stock, such amount representing the sum
of (i) 45,717,405 outstanding shares of Common Stock (which is equal to the
56,854,405 shares of Common Stock outstanding as of December 7, 1999, as
reported in the Company's Schedule 13E-4 Issuer Tender Offer Statement filed
with the Commission on December
7
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10, 1999 minus the 11,137,000 shares of Common Stock repurchased in the tender
offer, as reported in the Company's press release of January 18, 2000 and (ii)
518,470 shares of Common Stock issuable upon conversion of the Series B Shares
deemed to be beneficially owned by such Reporting Persons.
(c) The transactions in the Common Stock by the Reporting Persons
during the past 60 days are set forth on Annex A hereto.
(d) Not Applicable.
(e) Not Applicable.
8
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: January 27, 2000
FIXED INCOME ASSOCIATES, INC.
By: /s/ Nancy G. Zimmerman
-------------------------------------
Name: Nancy G. Zimmerman
Title: President
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: January 27, 2000
BRACEBRIDGE CAPITAL, L.P.
By: FIXED INCOME ASSOCIATES, INC.,
its General Partner
By: /s/ Nancy G. Zimmerman
-------------------------------------
Name: Nancy G. Zimmerman
Title: President
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: January 27, 2000
BRACEBRIDGE CAPITAL LLC
By: FIXED INCOME ASSOCIATES, INC.,
its Managing Member
By: /s/ Nancy G. Zimmerman
-------------------------------------
Name: Nancy G. Zimmerman
Title: President
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: January 27, 2000
/s/ Nancy G. Zimmerman
-----------------------------------------
NANCY G. ZIMMERMAN
12
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ANNEX A
Transactions in Shares of Common Stock and Series B
Preferred Stock within the Last 60 Days(1)
Aggregate Aggregate
Price Per Common Preferred
Date Share Share Amount Share Amount FIFI II L.P. FFI Fund Ltd.
- ---- ----- ------------ ------------ ------------ -------------
12/6/99 9.69 800 602
12/6/99 3.75 12,200 12,200
12/7/99 9.61 30,200 22,761
12/7/99 3.75 25,000 25,000
12/8/99 9.25 10,000 7,537
12/8/99 3.75 25,000 25,000
12/9/99 3.75 25,000 25,000
12/10/99 9.25 2,200 1,658
12/10/99 3.98 75,000 50,000 25,000
12/13/99 4.26 161,500 80,750 80,750
12/14/99 4.25 62,400 32,400 30,000
12/15/99 4.29 253,900 100,000 153,900
12/16/99 4.25 27,800 13,800 14,000
12/17/99 4.31 323,200 123,200 200,000
12/20/99 4.31 30,000 15,000 15,000
12/20/99 9.56 7,900 5,954
12/21/99 4.31 35,000 15,000 20,000
12/22/99 4.31 120,700 60,000 60,700
12/23/99 4.25 42,600 21,000 21,600
12/27/99 4.25 68,200 34,100 34,100
12/29/99 4.12 15,200 15,200
12/29/99 9.56 15,000 11,306
12/30/99 9.50 10,600 7,989
1/3/00 9.50 12,500 9,421
1/4/00 9.49 14,500 10,928
1/6/99 9.50 18,800 14,169
1/7/00 9.50 6,300 4,748
1/10/00 9.50 3,900 2,939
1/12/00 9.50 1,300 979
1/13/00 9.50 14,800 11,154
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(1) Except as otherwise noted, all transactions in shares of Common
Stock, as well as Series B Preferred Stock, that were effected during the past
sixty days have been open market purchases.
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1/14/00 9.38 14,000 10,551
1/18/00 9.56 2,700 2,034
1/19/00 9.56 900 678
1/20/00 9.56 5,900 4,446
1/21/00 9.56 900 678
1/24/00(2) 4.43 1,200 1,200
1/25/00(3) 4.55 2,728,938 1,405,556 1,323,382
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2 Open market sale.
3 Represents shares purchased by the Company in a tender offer pursuant
to the Company's Schedule 13E-4 Issuer Tender Offer Statement filed with the
Commission on December 10, 1999. The number of shares indicated for each of FIFI
and FFI is equal to the number of shares tendered by each such entity,
multiplied by 70.9626 percent, the final proration factor for the tender offer
as reported in the Company's press release of January 24, 2000.
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EXHIBIT C
SHAREHOLDER PROPOSAL:
RESOLVED, that the stockholders recommend to the Board of Directors that the
Company promptly undertake a program to liquidate substantially all of the
Company's available-for-sale portfolio and to use the liquidation proceeds to
pay down short-term borrowings, redeem at least 80% of the outstanding shares of
the Company's Series A and Series B preferred stock, call - to the extent
permissible - the outstanding shares of the Company's Series C and Series D
preferred stock, establish reasonable reserves, and distribute remaining
proceeds to the common shareholders; and that each quarter the Board publicly
report to the stockholders the status of such program of liquidation and
distribution.
SUPPORTING STATEMENT:
Between December 31, 1997 and December 3, 1999, the Company's per share book
value declined from $11.42 to $6.56. The common shares have traded at a
significant discount to book value for a considerable period, worsening the
negative impact on shareholders. The Company's common share price declined from
$27.6875 on September 17, 1997 to $4.375 on January 24, 2000. The Board of
Directors has proposed a reverse split of the common shares due to the
precipitous decline in the Company's share price.
The Company recently issued convertible Series C and Series D preferred shares
at a price which significantly diluted common shareholders. At the time, the
Company had "substantial liquidity" according to its own filings and no evident
need for a cash infusion. Despite the subsequent self-tender, the dilutive
damage had already been done. Capstead shareholders do not need management to
sell control to Fortress on a preferential basis in order to invest in a
Fortress-controlled company. Shareholders could independently purchase shares in
Impac Commercial Holdings, a Fortress-controlled company whose shares trade at
an even larger discount to book value than those of Capstead.
Shareholders strongly desire to realize the fair value of their equity
interests, but there is little prospect that shareholders will substantially
recover the losses they have suffered, even with new management and a new
investment strategy.
According to its filings, on September 30, 1999 the Company had untapped
liquidity of $374.7 million, representing 62% of total stockholders' equity of
$608.0 million, and potential total liquidity of $536 million (88% of total
stockholders' equity) if it sold its "available-for-sale" portfolio at the "fair
value estimate" and paid down short-term borrowings.
Of the assets in the "available-for-sale" portfolio, 98% are highly liquid
agency securities and 2% are liquid non-agency securities. Were these securities
sold in an orderly way, transaction costs should be less than $25 million. Cash
liquidity should have exceeded $511 million had this portfolio
15
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been sold in such a fashion around September 30, 1999.
We see no practical considerations preventing the Company from selling its
available-for-sale portfolio and returning capital to shareholders. The Company
will incur transaction costs from asset sales whether it reallocates or
distributes the proceeds. Common shareholders should be able to realize upwards
of 80% of book value in cash quickly, and substantially all the book value over
time as the held-to-maturity portfolio matures.
16
