Ellington Financial Inc. (NYSE:EFC) experienced a 2.1% drop in after-hours trading on Monday following the company's disclosure that it will launch a public offering of common stock. The offering consists of 8,775,000 shares of common stock, the company said.
Ellington indicated the primary objective for the proceeds is to redeem all outstanding shares of its Series A Fixed-to-Floating Rate Cumulative Redeemable Preferred Stock. The Series A preferred currently accrues dividends at a floating rate equal to the 3-month Secured Overnight Financing Rate plus 5.458%.
Two major investment banks are handling the transaction. Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC are listed as joint book-running managers for the offering. Ellington also expects to grant the underwriters a 30-day option to purchase up to an additional 1,316,250 shares.
The company said that any remaining proceeds, after completing the preferred redemption, will be directed toward general corporate purposes. Those uses may include acquiring assets that align with Ellington’s stated investment objectives and strategies.
Ellington will offer the shares under its existing shelf registration statement. That registration became effective upon filing with the Securities and Exchange Commission on December 23, 2025.
Ellington Financial invests across a spectrum of financial assets. Its portfolio includes residential and commercial mortgage loans, mortgage-backed securities, reverse mortgage loans, consumer loans and other debt and equity investments. The firm is externally managed by Ellington Financial Management LLC.
Context and mechanics
- The announced common share offering totals 8,775,000 shares, with a 30-day over-allotment option for up to 1,316,250 additional shares.
- Proceeds are intended first to fund the redemption of the Series A preferred instrument, which carries a floating dividend tied to 3-month SOFR plus 5.458%.
- Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC are joint book-running managers for the transaction.
The company’s disclosure coincided with a modest after-hours decline in its common stock price, reflecting market reaction to the equity issuance plan. The announcement outlines the immediate capital use and the potential for leftover proceeds to support Ellington’s ongoing corporate and investment activities.