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Asserts New Proposal Delivers Superior Value for the Company's Stockholders Relative to AG Mortgage Investment Trust's Unsolicited Offer
Highlights Proposal Provides Stockholders with Larger Value on a Total Basis and Cash Basis, Perpetually Lower Management Fees, and Greater Certainty of Closing
Notes Proposal Also Provides for a Performance-Based, Tiered Incentive Fee Structure, Superior to the Model Utilized by Angelo Gordon
Underscores Commitment to Consummating the Merger and Taking All Necessary Steps to Protect Stockholders' Interests
Terra Property Trust, Inc. today released the below letter sent to the Board of Directors of Western Asset Mortgage Capital Corporation (NYSE:WMC).
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August 03, 2023
Western Asset Mortgage Capital Corporation
385 E. Colorado Blvd.
Pasadena, CA 91101
Attention: The Board of Directors
Dear Members of the Board of Directors,
I write to you on behalf of Terra Property Trust, Inc. ("TPT" or "we") to reaffirm our commitment to consummating a merger with Western Asset Mortgage Capital Corporation ("WMC" or "you"). We firmly believe that a merger between TPT and WMC is the best path to maximizing value for WMC stockholders because it provides for, among other things, enhanced scale, a more diversified portfolio, and a stronger balance sheet. With that context in mind, we are pleased to submit an enhanced cash-and-stock proposal (the "TPT Enhanced Proposal") on terms that are clearly superior to the AG Mortgage Investment Trust, Inc. ("MITT") bid.
We trust that you will thoroughly and objectively evaluate the TPT Enhanced Proposal in accordance with both the terms of our Merger Agreement and your fiduciary duties as directors. Relative to MITT's unsolicited bid, you will find that the TPT Enhanced Proposal delivers significantly greater overall value to WMC stockholders by providing more cash, perpetually reduced management fees, and greater certainty of closing. A TPT-WMC merger also positions stockholders to benefit from what you acknowledged is "the partnership of a well-capitalized institutional partner in TPT, which brings a proven track record and has developed broad and deep expertise investing across cycles, property types, and markets."1
Through the contemplated merger, TPT plans to set a new standard in the mortgage REIT industry by better aligning the external manager's incentives with stockholders' interests. Specifically, we propose a structure that reduces fixed management fees and incentivizes performance. Our proposal seeks to correct the misalignment of interests between external managers and stockholders that MITT has exemplified by charging stockholders high fees that are paid to its external manager, AG REIT Management, LLC, a subsidiary of Angelo, Gordon & Co., L.P. ("Angelo Gordon"). WMC's stockholders deserve better.
Notable terms of the TPT Enhanced Proposal include the following:
The table in Appendix A simplifies the comparison between the TPT Enhanced Proposal and MITT's bid, showing how the TPT Enhanced Proposal is superior for WMC stockholders in every regard.
While we respect that you need to uphold your fiduciary duties by considering the MITT bid, we also believe the facts now speak for themselves when it comes to the best path forward for WMC's stockholders. We are prepared to take all necessary steps to protect our interests and position stockholders for the best future. We look forward to a speedy and orderly completion of our transaction.
Best,
Vik Uppal
Chairman & CEO
Terra Property Trust, Inc. & Mavik Capital Management, L.P.
Posted In: WMC