NewStar Completes $275 Million Term Debt Securitization in Milestone Transaction
First Middle Market Lender to Issue a Collateralized Loan Obligation Since Market Collapsed Amid Credit Crisis
BOSTON, Jan. 7, 2010 (GLOBE NEWSWIRE) -- NewStar Financial Inc. (Nasdaq:NEWS), a specialized commercial finance company, announced today that it has completed a $275 million term debt securitization. The proceeds will be used to refinance existing debt and provide $50 million of new lending capacity.
The offering of NewStar Commercial Loan Trust 2009-1 CLO is NewStar's fourth balance sheet securitization since inception and its first since the CLO market collapsed amid the credit crisis. Securitization of its commercial loans is part of a programmatic approach to the company's funding strategy. The notes offered through this transaction are primarily backed by a diversified portfolio of commercial loans originated by NewStar.
The transaction was executed through a private offering via Rule 144A. NewStar placed two classes of notes rated Aaa and A2 generating proceeds totaling approximately $187 million and will retain notes and an equity interest, which together represent 32% of the capital structure, or $88 million. The class of notes rated Aaa was priced at LIBOR plus 375 bps.
Wells Fargo Securities was sole lead manager on the transaction and Guggenheim Partners was the lead investor, purchasing the majority of the notes.
"We believe that this transaction is the first middle market CLO issued since the market collapsed amid the credit crisis. It is the latest in a series of steps we have taken to strengthen our balance sheet and position the Company to capitalize on an attractive market environment. Our ability to return to this market early further underscores the quality of NewStar's track record and direct lending franchise," said NewStar CEO, Tim Conway. "In 2009, our priorities were to protect the Company's balance sheet and maximize liquidity, while managing the impact of a severe economic contraction. It is exciting to be able to achieve these important liquidity and funding objectives and position the Company to return to profitability in 2010," he added.
"The CLO structure continues to provide effective term financing for our balance sheet," said John Frishkopf, head of asset management and treasury at NewStar. "This transaction will fully match-fund a static pool of commercial loans, which will include $50 million of new loans to be originated by NewStar. It will also allow us to leverage our capital more effectively and improve the cash flow dynamics of the loan collateral being financed," Frishkopf added. "This transaction together with the recently announced corporate debt financing greatly strengthens the Company's funding platform and positions us well to participate in the economic recovery. We were pleased with level of interest in the transaction generated by Wells Fargo Securities and excited to have Guggenheim Partners as the lead investor."
This announcement is neither an offer to sell nor a solicitation of an offer to buy any notes.
This press release contains forward-looking statements, including statements regarding NewStar's application of net proceeds and future operating results. These forward-looking statements involve a number of risks and uncertainties. Among the important factors that could cause actual results to differ materially from those results indicated in the forward-looking statements include uncertainties relating to future events that could affect its intended application of net proceeds and market conditions.
About NewStar Financial, Inc.:
NewStar Financial is a specialized commercial finance company focused on meeting the complex financing needs of companies and private investors in the middle markets. The Company specializes in providing senior secured debt financing for the acquisition or recapitalization of mid-sized companies and commercial real estate. NewStar originates loans directly through a team of experienced, senior bankers organized around key industry and market segments. The Company targets 'hold' positions of up to $20 million and selectively underwrites or arranges larger transactions for syndication to other lenders.
NewStar is headquartered in Boston MA and has regional offices in Darien CT and Chicago IL. In December of 2006, NewStar completed an Initial Public Offering. The Company's shares trade on the NASDAQ under the ticker symbol, NEWS. Please visit our website at www.newstarfin.com for more detailed information.
The NewStar Financial, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4044
CONTACT: NewStar Financial
Robert K. Brown
(C) Copyright 2010 GlobeNewswire, Inc. All rights reserved.