4:01PM Novastar Fin will not distribute REIT dividend after market changes make new issue of preferred securities not possible (NFI) 8.20 +0.10 : Co announces it will not proceed with declaring a dividend dividend on its common stock, as previously planned. NovaStar announced on July 16 that it intended to declare a dividend on its common stock, in the form of convertible preferred securities, to satisfy requirements to distribute approximately $157 million in 2006 taxable income to preserve its status as a Real Estate Investment Trust under the Internal Revenue Code of 1986. NovaStar said the decision not to declare a dividend related to 2006 taxable income will cause the Company's REIT status to be terminated, retroactive to January 1, 2006. As a result, NovaStar said it will file a consolidated tax return for the 2006 tax year today, in a timely manner, as a general C Corporation rather than as a REIT. The Company also will file a request for extension of time to pay its 2006 C Corporation tax liability, which is statutorily allowed under the Code. NovaStar said it expects that the termination of its REIT status for the 2006 tax year will have a significant adverse impact on its financial statements for the third quarter of 2007, which will include a period expense in the third quarter for the 2006 tax provision. As a result of NovaStar's change in corporate structure, the Company is currently reviewing the applicable New York Stock Exchange listing requirements and is engaged in continuing discussions with the NYSE.
NovaStar Dropping REIT Designation
biz.yahoo.com
Stock down over 16% in AH after this announcement. Maybe the shorts were right or just knew about the news.
EKS |
