CV Holdings, Inc. Announces Strategic Corporate Equity Investment by Tricadia Capital Management

June 30, 2015


Rick Koenigsberger or Ken Witkin or

Press Release

CV Holdings, Inc. Announces Strategic Corporate Equity Investment by Tricadia Capital Management

Newport Beach, CA. June 30, 2015 /PRNewswire/ — CV Holdings, Inc. (Other OTC: CVHL) today reported that it has entered into a Securities Purchase Agreement and an Investor Rights Agreement with an affiliate of Tricadia Capital Management, LLC (“Tricadia” or the “Investor”) in connection with the sale in a private placement of shares of newly created Non-Convertible Senior Preferred Stock of the Company (“Preferred”) and shares of Common Stock of the Company (“Common”) to grow the Company’s non-performing loan (“NPL”) business and develop other business lines as agreed with Tricadia. The Tricadia investment is expected to replace the existing funding source for the Company’s co-investment requirements on its NPL business. The Company is currently evaluating several other investment opportunities and, subject to Tricadia’s approval, may decide to pursue one or more of them.

The Investor may purchase up to $50.0 million of Preferred through multiple issuances, subject to certain agreed-upon conditions. On June 29, 2015, the Investor purchased $20.0 million of Preferred and received 4,350,000 shares of Common plus the right to receive an additional 8,271,596 shares at its option, together comprising 20% of the fully diluted common equity of the Company as of such date. The Investor may require that the Company redeem any Preferred on and after the five-year anniversary of its respective issuance. The Company has the option to pay or accrue a 10% dividend on Preferred from closing through the three-year anniversary of each issuance, and then may either continue to pay Preferred dividends in cash at the rate of 10% per annum or accrue such dividends at the rate of 12% per annum until the Preferred is redeemed or otherwise defeased. The Company may redeem any Preferred, subject to certain approvals by the Investor, on and after the three-year anniversary of its issuance. If the Company fails to make payment of dividends or redeem the Preferred timely, the Investor may become entitled to appoint a majority of the members of the Company’s board of directors.

At each subsequent funding by the Investor, the Company will issue additional shares of Common comprising 1% of the fully diluted common equity of the Company (calculated as of the date of such funding, as adjusted for any previous issuances that have diluted the Investor’s ownership) for every $1.0 million of Preferred purchased. If the full $50.0 million of Preferred were to be issued to the Investor, the Investor would consequently also own 50% of the Company on a fully diluted basis. In addition, the Investor has pre-emptive and other rights allowing the Investor to purchase any new issuances of securities by the Company.

The Investor has material corporate governance rights, including, among other things, the equivalent of two board seats and approval rights over major corporate decisions. No assurances can be given that the Investor will purchase additional Preferred or as to the timing or nature of the investment of the proceeds to the Company from any such issuance.

Although Preferred has a liquidation preference that is senior to Common, Preferred is not convertible into Common and therefore does not dilute the existing voting power or ownership of the holders of Common. Notwithstanding the foregoing, the Common issued and to be issued in conjunction with Preferred increases the amount of issued and outstanding Common, as described below. At closing, the Company’s outstanding fully diluted common shares increased from the currently fully diluted 50,486,385 to 63,107,981 and the Investor owns, or has the right to own, approximately 20% of the latter. On a pro forma basis, assuming that the Investor funds the full $50.0 million investment, the Company’s outstanding fully diluted shares would increase from the currently fully diluted 50,486,385 to 100,972,770, of which the Investor would own approximately 50%. The latter number is subject to further change to reflect any additional issuances that increase the number of shares necessary to provide the Investor with 1% of the fully diluted capital stock of the Company for each $1.0 million funded by the Investor.

About Tricadia Capital Management, LLC

Tricadia is an investment firm that manages credit-oriented hedge funds and alternative investment accounts. Founded in 2003, the firm is headquartered in New York and has approximately $4.0 billion in assets under management in multi-strategy and specialized funds and accounts. Tricadia is privately owned and employs approximately forty people, the majority of which are investment professionals.

About CV Holdings, Inc.

We have two business units, our legacy business as a commercial real estate specialty finance company primarily focused on managing a diversified portfolio of commercial real estate-related loans and securities, and our current business focused on residential NPLs.

Our Common Stock is currently quoted on the OTC Markets Group, or OTC Markets. While not a requirement, the OTC Markets Group encourages companies having their securities quoted thereon to provide adequate current information in accordance with its disclosure guidelines. We will evaluate the need to issue press releases containing information similar to the information disclosed herein. We do not undertake any obligation nor do we give any assurance that we will provide timely periodic disclosures or any public disclosure at all. The information provided in this press release is not complete and does not purport to be complete.

We elected to qualify as a real estate investment trust, or REIT, for U.S. federal income tax purposes commencing with the taxable year ended December 31, 2005. We currently intend to continue to qualify as a REIT. As a REIT, we generally will not be subject to U.S. federal income tax on that portion of our income that we distribute to our stockholders for so long as we continue to qualify as a REIT, including distributing at least 90% of our annual “REIT taxable income” to our stockholders. We conduct our operations so as to not be or become regulated as an investment company under the Investment Company Act of 1940. The Company has not had federal taxable income since 2007 and does not expect any federal taxable income in the foreseeable future.

Forward-Looking Information and Other Information

This press release contains forward-looking statements based upon the Company’s beliefs, assumptions and expectations of its future performance, taking into account all information currently available. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to the Company or are within its control. If a change occurs, the Company’s business, financial condition, liquidity and results of operations may vary materially from those expressed in its forward-looking statements.

The factors that could cause actual results to vary from the Company’s forward-looking statements include: the company’s ability to identify attractive investments agreeable to the Company and the Investor; the success of the Company’s current NPL business and JV with another institutional investor as disclosed in prior releases; the Company’s ability to redeem the Preferred; the availability of attractive NPL investments; the subsequent investments by the Investor; the U.S. general economy; the Company’s liquidity and ability to continue to cover its operating cash requirements; the Company’s future operating results; its business operations and prospects; availability, terms and deployment of short-term and long-term capital; availability of qualified employees; changes in interest rates; adverse development in the debt securities, credit and capital markets, adverse developments in the commercial finance and real estate markets; performance and financial condition of borrowers and corporate customers; any future litigation that may arise; the ultimate resolution of the Company’s numerous defaulted loans; the performance of the Company’s joint venture investments; and the ability to continue as a going concern. The Company undertakes no obligation to publicly update or revise any forward- looking statements.