MuniMae offering on way at $20.625 per share Proceeds will be used to add to bond portfolio

January 28, 1998|By William Patalon III | William Patalon III,SUN STAFF

Municipal Mortgage and Equity LLC, a Baltimore-based firm that invests in tax-exempt bonds backed by multifamily housing developments, will raise $58 million to $67 million this week from a secondary stock offering, the company said yesterday.

Proceeds will be used to bulk up the company's bond portfolio, the firm said.

The offering of at least 3 million shares at $20.625 per share is being underwritten by locally based Legg Mason Wood Walker Inc. in conjunction with Merrill Lynch & Co. and Wheat First Butcher Singer, according to the company. Merrill Lynch is based in New York and Wheat First in Richmond, Va.

Municipal Mortgage and Equity, with its headquarters at 218 N. Charles St., is more familiarly known as "MuniMae."

Company officials want to fuel a growth spurt in MuniMae, which means buying more bonds. Once the stock is issued, the net proceeds will be used to finance the acquisition of tax-free bonds worth $116 million. Those bonds, which will be acquired in a series of transactions, are secured by 14 multifamily communities containing an aggregate of 2,949 housing units in five states.

The stock offering is expected to close Friday. As planned, 3 million shares will be issued. However, as is the case with most public offerings, the underwriters have an option to purchase extra shares -- in this case, an additional 450,000 shares. Should this over-subscription option be activated, the $58 million MuniMae expects to reap would jump to about $67 million, according to the company.

With the money, the company would acquire the bonds, keeping about half and selling off or "securitizing" the other half. Because of a complex structure MuniMae is employing, the effective interest-rate yield on the company's share of the bonds would be 9.7 percent, according to a spokesman.

Because of the structure MuniMae has created, 85 percent of the money the company paid out in dividends last year was HTC tax-exempt, the company said.

MuniMae shares closed yesterday at $20.50, down 12.5 cents.

Pub Date: 1/28/98

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