Freddie Mac 2015 Annual Report Download - page 277

Financial Statements Notes to the Consolidated Financial Statements | Note 10
Freddie Mac 2015 Form 10-K 275
commitment fees previously added to the liquidation preference and not previously paid down. In addition,
if we issue any shares of capital stock for cash while the senior preferred stock is outstanding, the net
proceeds of the issuance must be used to pay down the liquidation preference of the senior preferred
stock; however, the liquidation preference of each share of senior preferred stock may not be paid down
below $1,000 per share prior to the termination of Treasury’s funding commitment. Following the
termination of Treasury’s funding commitment, we may pay down the liquidation preference of all
outstanding shares of senior preferred stock at any time, in whole or in part. If, after termination of
Treasury’s funding commitment, we pay down the liquidation preference of each outstanding share of
senior preferred stock in full, the shares will be deemed to have been redeemed as of the payment date.
The table below provides a summary of our senior preferred stock outstanding at December 31, 2015.
(in millions, except initial
liquidation preference price
per share) Shares Authorized Shares Outstanding Total Par Value
Initial
Liquidation
Preference
Price per Share
Total
Liquidation
Preference
Draw Date:
September 8, 2008 1.00 1.00 $ 1.00 $1,000 $1,000
November 24, 2008 — — — N/A 13,800
March 31, 2009 — — — N/A 30,800
June 30, 2009 — — — N/A 6,100
June 30, 2010 — — — N/A 10,600
September 30, 2010 — — — N/A 1,800
December 30, 2010 — — — N/A 100
March 31, 2011 — — — N/A 500
September 30, 2011 — — — N/A 1,479
December 30, 2011 — — — N/A 5,992
March 30, 2012 — — — N/A 146
June 29, 2012 — — — N/A 19
Total, senior preferred
stock 1.00 1.00 $ 1.00 $72,336
No cash was received from Treasury under the Purchase Agreement in 2015, because we had positive
net worth at December 31, 2014, March 31, 2015, June 30, 2015, and September 30, 2015 and,
consequently, FHFA did not request a draw on our behalf. At December 31, 2015, our assets exceeded
our liabilities under GAAP; therefore no draw is being requested from Treasury under the Purchase
Agreement. Our quarterly senior preferred stock dividend is the amount, if any, by which our Net Worth
Amount at the end of the immediately preceding fiscal quarter exceeds the applicable Capital Reserve
Amount, which was established at $3 billion for 2013 and declines to zero in 2018. Based on our Net
Worth Amount at December 31, 2015 and the Capital Reserve Amount of $1.2 billion in 2016, our
dividend obligation to Treasury in March 2016 will be $1.7 billion. See Note 2 for additional information.
The aggregate liquidation preference on the senior preferred stock owned by Treasury was $72.3 billion
as of both December 31, 2015 and 2014. See Note 16 for additional information.
COMMON STOCK WARRANT
Pursuant to the Purchase Agreement described in Note 2, on September 7, 2008, we issued a warrant to
purchase common stock to Treasury, in partial consideration of Treasury’s commitment to provide funds
to us.