Fannie Mae 2014 Annual Report Download - page 270

FANNIE MAE
(In conservatorship)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
F-55
(8) Issued and outstanding shares were 24,922 as of December 31, 2014 and 2013, respectively.
(9) Rate effective December 31, 2014. Variable dividend rate resets quarterly thereafter at a per annum rate equal to the greater of 4.50% or
3-Month LIBOR plus 0.75%.
(10) On November 21, 2007, we issued 20 million shares of preferred stock in the amount of $500 million. Subsequent to the initial
issuance, we issued an additional 1.2 million shares in the amount of $30 million on December 14, 2007 under the same terms as the
initial issuance.
(11) Rate effective December 31, 2014. Variable dividend rate resets quarterly thereafter at a per annum rate equal to the greater of 7.75% or
3-Month LIBOR plus 4.23%.
(12) Represents initial call date. Redeemable every five years thereafter.
(13) On May 19, 2008, we issued 80 million shares of preferred stock in the amount of $2.0 billion. Subsequent to the initial issuance, we
issued an additional 8 million shares in the amount of $200 million on May 22, 2008 and one million shares in the amount of $25
million on June 4, 2008 under the same terms as the initial issuance.
As described under “Senior Preferred Stock and Common Stock Warrant,” we issued senior preferred stock that ranks senior
to all other series of preferred stock as to both dividends and distributions upon dissolution, liquidation or winding up of the
company. During the conservatorship, the rights and powers of preferred stockholders (other than holders of senior preferred
stock) are suspended. The senior preferred stock purchase agreement with Treasury also prohibits the payment of dividends
on preferred stock (other than the senior preferred stock) without the prior written consent of Treasury. The conservator also
has eliminated preferred stock dividends, other than dividends on the senior preferred stock.
Each series of our preferred stock has no par value, is non-participating, is non-voting and has a liquidation preference equal
to the stated value per share. None of our preferred stock is convertible into or exchangeable for any of our other stock or
obligations, with the exception of the Convertible Series 2004-1.
Shares of the Convertible Series 2004-1 Preferred Stock are convertible at any time, at the option of the holders, into shares
of Fannie Mae common stock at a conversion price of $94.31 per share of common stock (equivalent to a conversion rate of
1,060.3329 shares of common stock for each share of Series 2004-1 Preferred Stock). The conversion price is adjustable, as
necessary, to maintain the stated conversion rate into common stock. Events which may trigger an adjustment to the
conversion price include certain changes in our common stock dividend rate, subdivisions of our outstanding common stock
into a greater number of shares, combinations of our outstanding common stock into a smaller number of shares and
issuances of any shares by reclassification of our common stock. No such events have occurred.
Holders of preferred stock (other than the senior preferred stock) are entitled to receive non-cumulative, quarterly dividends
when, and if, declared by our Board of Directors, but have no right to require redemption of any shares of preferred stock.
Payment of dividends on preferred stock (other than the senior preferred stock) is not mandatory, but has priority over
payment of dividends on common stock, which are also declared by the Board of Directors. If dividends on the preferred
stock are not paid or set aside for payment for a given dividend period, dividends may not be paid on our common stock for
that period. There were no dividends declared or paid on preferred stock (other than the senior preferred stock) for the years
ended December 31, 2014 or 2013.
After a specified period, we have the option to redeem preferred stock (other than the senior preferred stock) at its redemption
price plus the dividend (whether or not declared) for the then-current period accrued to, but excluding, the date of
redemption. The redemption price is equal to the stated value for all issues of preferred stock except Series O, which has a
redemption price of $50 to $52.50 depending on the year of redemption and Convertible Series 2004-1, which has a
redemption price of $105,000 per share.
Our preferred stock is traded in the over-the-counter market.
Senior Preferred Stock and Common Stock Warrant
On September 8, 2008, we issued to Treasury one million shares of Variable Liquidation Preference Senior Preferred Stock,
Series 2008-2 (“senior preferred stock”), with an aggregate stated value and initial liquidation preference of $1.0 billion. On
September 7, 2008, we issued a warrant to purchase common stock to Treasury. The warrant gives Treasury the right to
purchase shares of our common stock equal to 79.9% of the total number of shares of common stock outstanding on a fully
diluted basis on the date of exercise. The senior preferred stock and the warrant were issued to Treasury as an initial
commitment fee in consideration of the commitment from Treasury to provide funds to us under the terms and conditions set
forth in the senior preferred stock purchase agreement. We did not receive any cash proceeds as a result of issuing these
shares or the warrant. We have assigned a value of $4.5 billion to Treasury’s commitment, which has been recorded as a