RWT (Redwood Trust, Inc.) Sets November 17 Launch Date for Preferred Stock Exchange
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Redwood Trust announced on November 13, 2026 that it plans to open its preferred-for-common stock exchange on November 17. The exchange is part of the business reset Redwood outlined with its third-quarter results. The company expects to exchange up to $50 million of common stock, valued at its last closing price, and may increase the size if shareholders offer more stock than it initially plans to accept.
Shareholders who participate would receive new Series B participating preferred stock. Redwood expects a fixed annual dividend rate of 11% to 12% on the $25 stated liquidation preference, payable quarterly. That works out to $2.75 to $3.00 a year per preferred share if the final rate falls within that range. The dividends are cumulative, so any unpaid amounts would accrue. Redwood also expects the stated value of preferred shares received to exceed the value of common shares surrendered. The final exchange ratio and the terms that tie the preferred shares to the common share price are still due at launch.
For common shareholders, the trade-off is worth watching. An exchange would reduce the common share count, while the new preferred dividends would take priority over common dividends. How much earnings remain available to each common share will depend on the final dividend rate and how much stock Redwood accepts. Our view is that November 17 matters because the definitive terms should let shareholders size that recurring preferred claim and judge how much room the business has to support both classes of stock.
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This article is general information, not personalized investment advice. Fly High Investing may hold securities discussed in this article.