Redwood Trust, Inc. filed a current report on Form 8-K on September 15, 2026, disclosing the completion of a $205,000,000 aggregate principal amount offering of 7.00% Convertible Senior Notes due 2030, issued under an indenture dated the same day with Wilmington Trust, National Association as trustee.

Key Highlights

  • Total issuance: $205,000,000 aggregate principal amount of 7.00% Convertible Senior Notes due 2030 was issued on September 15, 2026.
  • Overallotment exercised: The initial purchasers exercised in full their option to purchase an additional $20,000,000 aggregate principal amount of Notes.
  • Conversion terms: The initial conversion rate is 204.0608 shares of Common Stock per $1,000 principal amount, equivalent to an initial conversion price of approximately $4.90 per share.
  • Conversion premium: The initial conversion price represents a premium of approximately 35.00% over the closing price of Common Stock on September 10, 2026.
  • Maximum share issuance: Initially, a maximum of 56,473,810 shares of Common Stock may be issued upon conversion, based on the initial maximum conversion rate of 275.4820 shares per $1,000 principal amount.
  • Interest payments: The Notes bear interest at 7.00% per year, payable semi-annually on March 15 and September 15 of each year, beginning March 15, 2027.
  • Maturity date: The Notes mature on September 15, 2030, unless earlier redeemed, repurchased, or converted.

Redwood Trust's 7.00% Convertible Notes: Key Terms and Obligations

According to the filing, Redwood Trust (NYSE:RWT) entered into a purchase agreement on September 10, 2026, with the representatives of several initial purchasers, initially agreeing to sell $185,000,000 aggregate principal amount of Notes. The filing states that the initial purchasers fully exercised their option to purchase an additional $20,000,000 aggregate principal amount, bringing the total issuance to $205,000,000. The Notes were issued to the initial purchasers in reliance upon Section 4(a)(2) of the Securities Act of 1933, as amended, in transactions not involving any public offering, and were resold to persons the initial purchasers reasonably believed to be "qualified institutional buyers" under Rule 144A.

The filing describes the Notes as general unsecured obligations of the company, ranking equal in right of payment with other existing and future senior unsecured indebtedness, and senior to any indebtedness contractually subordinated to the Notes. However, the filing notes the Notes are "effectively subordinated in right of payment to the existing and future secured indebtedness of the Company to the extent of the value of the collateral securing such indebtedness, and structurally subordinated to the claims of the Company's subsidiaries' creditors." Before June 17, 2030, holders may convert only upon the occurrence of certain events; from and after that date, holders may convert at any time until the close of business on the second scheduled trading day immediately before maturity.

The company disclosed that upon conversion, the conversion value will be determined over an "Observation Period" of 25 trading days and will be paid in cash up to at least the principal amount of the Notes being converted, with the company electing to settle any remaining amount entirely in cash or in a combination of cash and Common Stock. The filing also discloses that the company retains the right to redeem the Notes, in whole or in part, prior to maturity, but only to the extent necessary to preserve its status as a real estate investment trust for U.S. federal income tax purposes, at a redemption price equal to the principal amount plus accrued and unpaid interest.

What Was Disclosed

Redwood Trust disclosed the issuance of $205,000,000 of 7.00% Convertible Senior Notes due September 15, 2030, including the full exercise of the initial purchasers' overallotment option, the key conversion and redemption terms, and the creation of a direct financial obligation under Items 1.01, 2.03, 3.02, and 8.01.