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Annaly Capital Management, Inc. Announces Proposal to Acquire CreXus Investment Corp.

  Annaly Capital Management, Inc. Announces Proposal to Acquire CreXus
  Investment Corp.

Business Wire

NEW YORK -- November 12, 2012

Annaly Capital Management, Inc. (NYSE: NLY) (“Annaly” or the “Company”)
announced today that it has proposed to the Board of Directors of CreXus
Investment Corp. (NYSE: CXS) (“CreXus”) to acquire for cash all of the shares
of CreXus that Annaly does not currently own.

CreXus has approximately 76,630,528 shares of common stock outstanding, of
which Annaly holds 9,527,778 shares, or approximately 12.4%.

PROPOSAL TERMS

Under the terms of the proposal, Annaly proposes to acquire all the CreXus
shares it does not already own for $12.50 per share in cash. This represents
approximately a 13% premium to CreXus’ last reported share price,
approximately a 16% premium to the last 3-month average price and
approximately a 5% premium to the common stock book value per share as
reported in CreXus’ earnings release for the third quarter of 2012. The
proposal states that it is subject to satisfactory negotiation of mutually
acceptable definitive documentation, which documentation will not have any
financing condition to close.

Given that Fixed Income Discount Advisory Company (“FIDAC”), a wholly owned
subsidiary of Annaly, manages CreXus, and two employees of FIDAC are on
CreXus’ Board of Directors, Annaly expects that CreXus’ Board will create a
Special Committee consisting entirely of directors who are independent of
Annaly to consider the proposal contained in Annaly’s letter and to negotiate
the terms of any transaction resulting from that proposal.

A copy of the Company’s proposal to the Board of Directors of CreXus is set
forth below.

Advisors

BofA Merrill Lynch is acting as financial advisor and K&L Gates LLP is acting
as legal advisor to Annaly in connection with this proposal.

About Annaly Capital Management, Inc.

Annaly’s principal business objective is to generate net income for
distribution to investors from its investment securities and from dividends it
receives from its subsidiaries. Annaly is a Maryland corporation that has
elected to be taxed as a real estate investment trust (“REIT”).

About CreXus Investment Corp.

CreXus (NYSE: CXS) is a specialty finance company that acquires, manages and
finances, directly or through its subsidiaries, commercial mortgage loans and
other commercial real estate debt, commercial mortgage-backed securities and
other commercial real estate-related assets. CreXus’ principal business
objective is to generate net income for distribution to investors from the
spread between the yields on its investments and the cost of borrowing to
finance their acquisition and secondarily to provide capital appreciation.
CreXus, a Maryland corporation that has elected to be taxed as a REIT, is
externally managed by FIDAC, which is a wholly-owned subsidiary of Annaly.
Each of CreXus’ officers also serves as an employee of Annaly or FIDAC.

About Fixed Income Discount Advisory Company

FIDAC is an investment advisor registered with the Securities and Exchange
Commission and a wholly owned subsidiary of Annaly. FIDAC is a fixed-income
investment management company specializing in managing fixed income
investments in (i) Agency RMBS, (ii) non-Agency RMBS, including investment
grade and non-investment grade classes, which are typically pass-through
certificates created by a securitization of a pool of mortgage loans that are
collateralized by residential real properties and (iii) collateralized debt
obligations, or CDOs. FIDAC has experience in managing and structuring debt
financing associated with these asset classes and commenced active investment
management operations in 1994.

The Company’s proposal letter to the Board of Directors of CreXus is as
follows:


November 9, 2012
Board of Directors
CreXus Investment Corp.
1211 Avenue of the Americas
New York, NY 10036


Lady and Gentlemen:

Annaly has been analyzing alternatives with respect to the CreXus commercial
real estate related investment business, and believes it could be beneficial
to all constituents for Annaly to acquire the 87.6% of CreXus that it does not
currently own.

Accordingly, by this letter, Annaly is proposing that it acquire all the
CreXus shares it does not already own for $12.50 per share in cash. This
represents approximately a 13% premium to CreXus’ last reported share price,
approximately a 16% premium to the last 3-month average price and
approximately a 5% premium to the common stock book value per share as
reported in CreXus’ earnings release for the third quarter of 2012.

Our proposal is subject to satisfactory negotiation of mutually acceptable
definitive documentation, which documentation will not have any financing
condition to close. We have engaged Bank of America Merrill Lynch as our
financial advisor and K&L Gates as legal counsel to assist us in the proposed
transaction.

Given that Fixed Income Discount Advisory Company (FIDAC), a wholly owned
subsidiary of Annaly, manages CreXus, and two employees of FIDAC are on
CreXus’ Board of Directors, we expect that the CreXus Board will create a
Special Committee consisting entirely of directors who are independent of
Annaly to consider the proposal contained in this letter and to negotiate the
terms of any transaction arising from that proposal. We further expect that
the Special Committee will engage its own financial and legal advisers. If
that is the case, I and others at Annaly will be happy to meet with members of
the Special Committee and we will instruct our financial and legal advisers to
work with the financial and legal advisers to the Special Committee regarding
the transaction contemplated by this proposal.

We are aware that it is likely that members of, or advisors to, the Special
Committee will want to review detailed confidential information about CreXus
and its assets and liabilities and that the Special Committee may want to make
information available to other persons Therefore, we have instructed the
applicable FIDAC employees who are responsible for managing CreXus to provide
detailed confidential information about CreXus and its assets and liabilities
to the Special Committee and its advisors, and to make that information, or
portions of it specified by the Special Committee, available as may be
requested by the Special Committee to whomever the Special Committee may
designate, including Annaly. We are also instructing the FIDAC employees to
cooperate fully with the Special Committee and its advisors.

As we are a current Schedule 13D filer with regard to CreXus, we are required
under securities laws to amend our filing to publicly disclose our offer to
you. Accordingly, we will be filing this letter promptly with the SEC and
issuing a press release regarding it.

We at Annaly look forward to working with CreXus’ independent directors with
regard to the transaction Annaly is proposing in this letter.

      
              Sincerely,
              /s/ Wellington Denahan
              Wellington Denahan
              Chairman and Chief Executive Officer
              

This news release and our public documents to which we refer contain or
incorporate by reference certain forward-looking statements which are based on
various assumptions (some of which are beyond our control) may be identified
by reference to a future period or periods or by the use of forward-looking
terminology, such as "may," "will," "believe," "expect," "anticipate,"
"continue," or similar terms or variations on those terms or the negative of
those terms. Actual results could differ materially from those set forth in
forward-looking statements due to a variety of factors, including, but not
limited to, changes in interest rates; changes in the yield curve; changes in
prepayment rates; the availability of mortgage-backed securities for purchase;
the availability of financing and, if available, the terms of any financings;
changes in the market value of our assets; changes in business conditions and
the general economy; our ability to integrate the commercial mortgage
business; our ability to consummate any contemplated investment opportunities;
risks associated with the businesses of our subsidiaries, including the
investment advisory business of our wholly-owned subsidiaries, including: the
removal by clients of assets managed, their regulatory requirements, and
competition in the investment advisory business; risks associated with the
broker-dealer business of our wholly-owned subsidiary; changes in government
regulations affecting our business; our ability to maintain our qualification
as a REIT for federal income tax purposes; and our ability to maintain our
exemption from registration under the Investment Company Act of 1940, as
amended. For a discussion of the risks and uncertainties which could cause
actual results to differ from those contained in the forward-looking
statements, see "Risk Factors" in our most recent Annual Report on Form 10-K
and any subsequent Quarterly Reports on Form 10-Q. We do not undertake, and
specifically disclaim any obligation, to publicly release the result of any
revisions which may be made to any forward-looking statements to reflect the
occurrence of anticipated or unanticipated events or circumstances after the
date of such statements.

Contact:

Annaly Capital Management, Inc.
Investor Relations, 888-8Annaly
 
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