IRVINE, Calif., Dec. 22 /PRNewswire-FirstCall/ -- ECC Capital Corporation , a mortgage finance real estate investment trust (REIT) that originates and invests in residential mortgage loans, announced today that its Board of Directors has declared a cash dividend of $0.24 per share of common stock for fiscal year 2006. The dividend will be paid on January 29, 2007 to stockholders of record at the close of business on December 29, 2006. Due to the magnitude of the dividend of $0.24 per share, relative to the Company's current stock trading price, the ex-dividend date will be deferred until January 30, 2007, the first trading date following the dividend payment date. As a result, common stockholders who sell their shares after the record date, and through the payment date, also will be selling their right to receive the dividend.
On December 5, 2006, ECC Capital announced its intention to make distributions to its stockholders totaling approximately $80 million, or $0.80 per share, within thirty days after the close of the sale transaction with Bear Stearns Residential Mortgage Corporation (Bear Res). The cash dividend of $0.24 per share represents a portion of the intended total distribution. The remaining portion of the intended distribution, or $0.56 per share, is expected to be paid within thirty days after the close of the transaction with Bear Res. The sum of the two distributions is estimated to equal $0.80 per share.
ECC Capital's ability to make distributions totaling $0.80 per share or make such distributions within this time frame will be dependent upon a variety of factors, including, but not limited to, the closing of the transaction with Bear Res, its ability to refinance debt secured by its retained interests in securitizations, the timing of the receipt of certain expected cash flows from its retained interests in securitizations, the disposition of remaining loan inventory and certain other assets, the settlement of various payroll and repurchase obligations and payment of expenses related to the sale transaction.
Based upon the Company's estimated undistributed REIT taxable income for fiscal year 2006, the Company believes that no portion of the fiscal year 2006 dividend will be considered a return of capital or capital gain dividend. Stockholders who are taxed as individuals will treat the fiscal year 2006 dividend as ordinary income taxable at ordinary income tax rates. Corporate stockholders will not be eligible for the dividends received deduction with respect to these distributions.
Stockholders who are tax exempt or non-U.S. corporations or residents may be required to report a portion of the Company's 2006 dividend as excess inclusion income as defined under the Internal Revenue Code. The Company will provide the amount of excess inclusion income on the Company's Web site after year end.
The above statements are not tax advice and stockholders are encouraged to consult their personal financial and tax advisors regarding the specific federal, state, local, foreign and other tax consequences to them regarding their ownership of shares of the Company's common stock and the specific implications of this deferral of the ex-dividend date.
About ECC Capital Corporation
ECC Capital Corporation, headquartered in Irvine, Calif., is a mortgage finance real estate investment trust (REIT) that originates and invests in residential mortgage loans. Primarily through its wholesale subsidiary, ECC Capital offers a series of mortgage products to borrowers, with a particular emphasis on "nonconforming" borrowers who generally do not satisfy the credit, collateral, documentation or other standards required by conventional mortgage lenders and loan buyers. ECC Capital is currently structured to qualify as a REIT by managing a portfolio of nonconforming loans it originates or acquires. As a REIT, ECC Capital is required to distribute dividends to its stockholders from net income generated from the spread between the interest income on its assets in its portfolio and the costs of capital to finance its acquisition of these assets.
Safe Harbor Regarding Forward-Looking Statements
Certain statements contained in this press release, including statements relating to ECC Capital's ability to make distributions totaling $0.80 per share and the related time frame for payment of such distributions, if any, are deemed forward-looking statements under federal securities laws and ECC Capital intends that those forward-looking statements be subject to the safe-harbor created thereby. These forward-looking statements are based on current expectations and assumptions and are subject to risks and uncertainties, which could affect ECC Capital's future plans. ECC Capital cautions that these statements are qualified by important factors that could cause actual results to differ materially from those reflected by the forward-looking statements. These factors include, but are not limited to: (i) the closing of the transaction with Bear Stearns Residential Mortgage Corporation, (ii) ECC Capital's ability to refinance debt secured by its retained interests in securitizations, (iii) the timing of the receipt of certain expected cash flows from its retained interests in securitizations, (iv) the disposition of remaining loan inventory and certain other assets, (v) the settlement of various payroll and repurchase obligations, (vi) the payment of expenses related to the sale transaction and (vii) other factors and risks discussed in ECC Capital's Annual Report on Form 10-K/A for the year ended December 31, 2005, which was filed with the Securities and Exchange Commission on October 27, 2006 (Form 10-K/A). Before making an investment decision with regard to ECC Capital stock, ECC Capital urges you to read its Form 10-K/A and all of its subsequent filings with the Securities and Exchange Commission, which can be found at http://www.sec.gov/. You should also be aware that, except as otherwise specified, all information in this news release is as of December 22, 2006. ECC Capital undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in ECC Capital's expectations.
For Further Information:
AT THE COMPANY:
Roque A. Santi
Chief Financial Officer
(949) 856-7611
