I use IBKR. I did not sell AAIN when the parent merged with Ellington. Quantum online states the security is not traded but they believe still pays interest. Today I attempted to place s ell order for my position nad was directed to a “Special Position Liquidation Form”. That form authorizes IBKR to simply remove the ticker from my account with no transaction, netting me nothing. I called IBKR and their bond desk is attempting to find bid/ask numbers for me. Has anyone had success in trading AAIN since delisting? I may be relegated to simply holding the position, collecting dividends and waiting until 2026 for return of capital. I received a dividend on 2/1/24. Thanks
Hi @5imple5,
Before you run off a cliff, have you spoken with Ellington Investor services?
Your bond should have been transferred/converted when the merger completed.
You may own an Ellington issue now.
Call them or write them.
Does that help you?
Gene
All holdings and some statistics on my Fool profile page
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According to Ellington’s FAQs on the merger Arlington Asset Investment Corp. Merger FAQs | Ellington Financial Inc. the obligations of the trust preferreds and notes issued by Arlington have been assumed by a subsidiary of Elliot:
I would caution that this can be a pre-cursor to what’s known as ‘Waldenization’ of obligations of a company that was taken over, which is where the acquirer simply refuses to pay the obligations, and because there was no ‘change of control’ language specified in the prospectus of the acquired obligations, there is little that can be done other than sue the acquirer, and hope to collect something after the lawyer’s fees.
It is a good sign that you got the dividend, but I would closely watch what happens to the 2025 notes (AIC).
AJ
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Thanks to both Gene and aj485 for responses. The bonds were delisted, but Ellington seems to be OK with maintaining the issue. I would think they value PR and would not want a hit from dumphing AAIN. Don’t want a Walden on this!! The REIT Forum on Seeking Alpha covered the issue when it was Arlington, but dropped coverage when the issue was delisted. They do cover EFC and currently rate it hold. I hold an EFC preferred issue that has a decent risk rating and is currently rated hold on the forum.
Since the prospectus for AAIN 424B5 (sec.gov) specifically says:
In addition, the indenture does not include any protection against certain events, such as a change of control, a leveraged recapitalization or “going private” transaction (which may result in a significant increase of our indebtedness levels), restructuring or similar transactions.
there is no requirement for the issue to be converted to an Ellington issue, nor has it been, according to the FAQs that Ellington posted. An Ellington subsidiary (not the parent) has assumed the obligations and the issue has been delisted.
AJ
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As I said, I would watch what happens with the 2025 issue - AIC. If they were fine with fully maintaining and paying off the issue, I would question why they delisted it.
What would concern me is that the preferred stock AAIC-B had change of control language in the prospectus Form 424B5 (sec.gov) stating:
In addition, upon the occurrence of a Change of Control we will be required to redeem all of the shares of Series B Preferred Stock on the effective date of any such Change of Control at a cash redemption price of $25.00 per share, plus any accumulated and unpaid dividends thereon (whether or not authorized or declared) to, but excluding, the redemption date. The Series B Preferred Stock has no stated maturity, is not subject to any sinking fund and will remain outstanding indefinitely unless repurchased or redeemed by us.
but it appears that issue is still trading as EFC-D. So it’s not clear to me that Ellington has the wherewithal to redeem the Arlington issues.
AJ
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I’m curious. Why would anyone EVER buy a bond that can be disclaimed after a change of control? Since a change of control can happen anytime, doesn’t that mean that the bond can become “worthless” at any time?
@aj485 I really like the idea of following AIC as a potential proxy for AAIN. I’ll take your advice!
No surprise, IBKR messaged me this morning that they cannot find a market for the shares