Bimini Capital Management, Inc. · OTC:BMNM
Bimini Capital Management — Merger or Acquisition (August 2012)
20 slides from Bimini Capital Management's merger presentation, Aug 3, 2012
Slide 1: Merger Presentation August 2012
Merger Presentation August 2012
Slide 2: Disclaimers
Disclaimers FORWARD-LOOKING INFORMATION Some of the statements in this presentation may constitute forward-looking statements. Words such as “believe,” “expect,” “anticipate,” “project,” “target,” “optimistic,” “intend,” “aim,” “will” or similar expressions are intended to identify forward-looking s
Slide 3: Proposed Merger Summary
Proposed Merger Summary Merger Target: Orchid Island Capital, Inc. (“Orchid Island”). Target Business: Agency RMBS REIT with current stockholder equity of approximately $14.4 million, as of 3/31/2012, and an Agency RMBS portfolio fair value of approximately $85.2 million. Orchid Island’s managem
Slide 4: Attractive Valuation Entry Point
Attractive Valuation Entry Point Upon completion of FlatWorld’s tender offer, merger and associated transactions, each FlatWorld shareholder will own a pro rata portion of the Company (the post-merger owner of Orchid Island Capital, LLC) and each holder of an ordinary share as of the record date s
Slide 5: Merger Structure Provides Up-Front Cash and Economic Value
Merger Structure Provides Up-Front Cash and Economic Value In exchange for Preferred Shares convertible into 1,418,730 ordinary shares of FlatWorld, FlatWorld is acquiring Orchid Island and its Agency RMBS portfolio with a book value of approximately $14.4 million – a merger value of $10.18 per shar
Slide 6: Post-Merger Structure Designed to Minimize Expenses
Post-Merger Structure Designed to Minimize Expenses During the Company’s Growth Phase No incentive fee and shareholder friendly management fee structure which scales downward on a percentage basis as the equity of the Company increases. Manager will waive allocation of overhead until the Company
Slide 7: Experienced Management
Experienced Management Robert E. Cauley G. Hunter Haas, IV Jerry Sintes Chief Executive Officer, President and Chief Financial Officer, Secretary, Chief Vice President, Controller and Treasurer Chairman of the Board Investment Officer and Director Co-Founded Bimini Capital 11 years of industry exper
Slide 8: Independent Directors
Independent Directors John B. Van Heuvelen W. Coleman Bitting Frank P. Filipps Ava L. Parker Position at Orchid Island: Lead Position at Orchid Island: Position at Orchid Island: Position at Orchid Island: outside director; audit committee Independent director, Independent Director, member of Indepe
Slide 9: Overview of Orchid Island
Overview of Orchid Island Externally Target Assets Management Management Fee Dividend Policy Managed Agency pass-though Robert E. Cauley, Manager will be a 90% 1.50% of Distribute all taxable securities and CEO owned subsidiary of shareholder’s equity, REIT income, assuming structured Agen
Slide 10: Investment Highlights
Investment Highlights Track Record of Performance Annualized return on invested capital at Bimini of 26.8% since September 2008 143% cumulative return on invested capital based on 15 quarters of operation Demonstrated consistent returns through Agency- only strategy with minimal credit risk Ne
Slide 11: Challenges of the Traditional Model
Challenges of the Traditional Model The traditional REIT investment model: Repo-funded pass-through securities Holders of premium priced Agency RMBS are Equity Issuances vs. Agency Prices(1) $ in 000s Dollars ($) Price Risk vulnerable to losses if prepayments rise 3,000 108 unexpectedly Agency Mor
Slide 12: Orchid Approach
Orchid Approach 1 Asset Selection 2 Embedded Leverage 3 Protect Book Value Issue Traditional REITs buy a Traditional REITs finance Traditional REITs narrow catalogue of low- long-term assets with short imperfectly hedge MBS with duration MBS term debt swaps Orchid expands the Unfunded stru
Slide 13: Our Approach to Risk Management
Our Approach to Risk Management Asset Selection Book Value Stability Embedded Leverage Structured Agency RMBS can Agency pass-though securities Strategy does not require ongoing provide more attractive returns combined with structured Agency fixed swap payments, yet has a than pass-throughs in
Slide 14: Historical Performance Of the Manager
Historical Performance Of the Manager Cumulative Returns for the Strategy(1) Quarterly Returns on Invested Capital % % 150 16 125 12 100 8 75 4 50 0 25 0 -4 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2008 2009 2010 2011 2008 2009 2010 2011 Attractive Ri
Slide 15: Portfolio Characteristics & Asset Allocation
Portfolio Characteristics & Asset Allocation Reinvestment Opportunity Orchid can be more nimble in its asset selection than larger Agency REITs Illustrative Equity Allocation that have to buy the market $mm $37.1 $35.0 Agency pass-throughs are currently valued more richly than Agency IOs and 52%
Slide 16: Agency REIT Attractive Historical Performance
Agency REIT Attractive Historical Performance Annual Return On Average Common Equity % 2011Y 2010Y 2009Y 2008Y 2007Y 2006Y 2005Y 2004Y 2003Y 2002Y 2001Y NLY 2.42 13.13 22.97 5.00 11.14 4.08 -1.67 16.26 16.04 22.44 21.10 CMO 14.05 12.79 14.77 19.86 2.38 -10.88 25.47 18.02 37.93 34.57 28.79 ANH 13.07
Slide 17: Attractive Returns
Attractive Returns Dividend Yield Leverage (Repo / Equity) (1) Interest Rate Sensitivity Increase in Portfolio Value Based on 7.2x 50 bps Increase in Rates 7.0x 0.4% 0.31% 0.2% 13.1% 12.6% 0.0% 6.0x -0.2% 12.0% -0.4% 5.0x -0.6% 4.3x -0.8% -0.82% 4.0x -1.0% 8.0% ORC Peer Median Increase in Equity Val
Slide 18: Merger Presentation August 2012
Merger Presentation August 2012
Slide 19: Proposed Merger Details
Proposed Merger Details Merger Target: Orchid Island Capital, Inc. (“Orchid Island”). Target Business: Agency RMBS REIT with current stockholder equity of approximately $14.4 million, as of 3/31/2012, and an Agency RMBS portfolio fair value of approximately $85.2 million. Orchid Island’s managem
Slide 20: Structure of the Transaction
(1) Structure of the Transaction Bimini Capital FlatWorld Management, Public FlatWorld Sponsor and Shareholders: Inc. Shareholders Ordinary Shareholders of FlatWorld, following tender 141,873 Class A Preferred Shares 2,295,500 Ordinary offer consummation and upon record date: 100% (convertible to 1,
Bimini Capital Management — Merger or Acquisition (August 2012) on 6ix