Two Harbors Investment Corp. Announces Closing of Convertible Senior Notes due 2026 Offering

Two Harbors Investment Corp. (NYSE: TWO), an Agency + MSR mortgage real estate investment trust, today announced the closing of its underwritten public offering of $287.5 million aggregate principal amount of 6.25% convertible senior notes due 2026 (the “Notes”), which includes $37.5 million aggregate principal amount of the Notes sold by the company to the underwriters of the offering pursuant to the option to purchase additional Notes.

The Notes will be unsecured, pay interest semiannually at a rate of 6.25% per annum and be convertible at the option of the holder into shares of the company’s common stock. The Notes will mature in January 2026, unless earlier converted or repurchased in accordance with their terms. The company will not have the right to redeem the Notes prior to maturity, but may be required to repurchase the Notes from holders under certain circumstances. The Notes will have an initial conversion rate of 135.5014 shares of common stock per $1,000 principal amount of the Notes (equivalent to an initial conversion price of $7.38 per share), subject to adjustment.

The net proceeds from the offering were approximately $279.9 million after deducting underwriting discounts and estimated offering expenses payable by the company. The company intends to use the net proceeds from the offering to fund the repurchase via privately negotiated transactions of approximately $143.7 million principal amount of its 6.25% Convertible Senior Notes due 2022. The balance of the net proceeds are expected to be used for general corporate purposes. General corporate purposes may include additional repurchases of the company’s 6.25% Convertible Senior Notes due 2022, the purchase of the company’s target assets, including Agency RMBS, mortgage servicing rights and other financial assets, in each case subject to the company’s investment guidelines and to the extent consistent with maintaining its REIT qualification, the refinancing or repayment of debt, the repurchase or redemption of common and preferred equity securities, and other capital expenditures.

J.P. Morgan Securities LLC, Barclays Capital Inc., and RBC Capital Markets, LLC acted as joint book-running managers for the offering of the Notes.

The offering was made pursuant to the company’s shelf registration statement previously filed with the Securities and Exchange Commission (“SEC”) on February 28, 2018 (Commission File No. 333-223311). The offering was made only by means of a prospectus supplement and an accompanying prospectus. Before you invest, you should read the prospectus supplement and accompanying prospectus along with other documents that the company has filed with the SEC for more complete information about the company and this offering. Copies of the preliminary prospectus supplement and accompanying prospectus, when available, may be obtained by contacting:

J.P. Morgan Securities LLC
c/o Broadridge Financial Solutions
1155 Long Island Avenue
Edgewood, NY 11717
Or by email at: prospectus-eq_fi@jpmchase.com
Or by telephone at: 1 (866) 803-9204

This press release shall not constitute an offer to sell, or a solicitation of an offer to buy, the Notes or any other securities, nor shall there be any sale of the company’s securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

Cautionary Notice Regarding Forward-Looking Statements

This release may include statements and information that constitute “forward-looking statements” within the meaning of section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended, and we intend such forward-looking statements to be covered by the safe harbor provisions therein and are included in this statement for purposes of invoking these safe harbor provisions. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, targets, expectations, anticipations, assumptions, estimates, intentions and future performance. The forward-looking statements made in this release include, but may not be limited to, expectations regarding the use of proceeds from the offering.

Forward-looking statements are not guarantees, and they involve risks, uncertainties and assumptions. There can be no assurance that actual results will not differ materially from our expectations. We caution investors not to rely unduly on any forward-looking statements and urge you to carefully consider the risks identified under the captions “Risk Factors,” “Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our public filings with the SEC, which are available on the SEC’s website at www.sec.gov.

All written or oral forward-looking statements that we make, or that are attributable to us, are expressly qualified by this cautionary notice. Except to the extent required by applicable laws and regulations, we undertake no obligations to update these forward-looking statements to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.

Two Harbors Investment Corp.

Two Harbors Investment Corp., a Maryland corporation, is a real estate investment trust that invests in residential mortgage-backed securities, mortgage servicing rights and other financial assets. Two Harbors is headquartered in Minnetonka, MN.

Additional Information

Stockholders of Two Harbors and other interested persons may find additional information regarding the company at the Securities and Exchange Commission’s Internet site at www.sec.gov or by directing requests to: Two Harbors Investment Corp., 601 Carlson Parkway, Suite 1400, Minnetonka, MN, 55305, telephone 612-453-4100.

Contacts:

Paulina Sims, Senior Director, Investor Relations, Two Harbors Investment Corp., 612-500-2893, Paulina.Sims@twoharborsinvestment.com

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