Company: TWO-PC
Filing Date: 2025-07-29
Form Type: 10-Q
Source: 0001465740-25-000140
Chunk: 94

Company: TWO HARBORS INVESTMENT CORP.
Filing Date: 2025-07-29
Form: 10-Q
Item: Item 1
Chunk 94
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 motion for summary judgment has been granted to the extent that the Company did not have a basis on which to terminate the Management Agreement for cause and as to the Company’s pending counterclaims, and the plaintiffs’ motion for summary judgment otherwise has been denied. The Company’s motion for summary judgment has been denied. The parties have since agreed to participate in mediation, though the potential outcome cannot be determined at this time.As of June 30, 2025, the Company’s consolidated financial statements reflect a contingency liability and related expense of $199.9 million. This contingency liability is reflective of the $139.8 million termination fee that the Company believes would have been payable to PRCM Advisers for termination on the basis of unfair compensation pursuant to the Management Agreement, plus applicable pre-judgment interest on such termination fee that has accrued through June 30, 2025. The Company’s consolidated financial statements as of June 30, 2025 do not recognize or disclose a range of reasonably possible loss under ASC 450 related to claims in the Federal Complaint for which summary judgment was not granted because management does not believe that a loss or expense related to such claims is probable or reasonably estimable. The specific factors that limit the Company’s ability to reasonably estimate a loss or expense related to these claims are that the matter is still awaiting trial and final judgment and the outcome of litigation is uncertain. If and when management believes losses associated with these claims are a probable future event that may result in a loss or expense to the Company and the loss or expense is reasonably estimable, the Company will recognize a contingency liability and resulting loss in such period.Based on information currently available, management is not aware of any other legal or regulatory claims that would have a material effect on the Company’s consolidated financial statements and therefore no additional accrual is required as of June 30, 2025.

Note 15. Stockholders’ Equity

Redeemable Preferred StockThe following is a summary of the Company’s series of cumulative redeemable preferred stock issued and outstanding as of June 30, 2025. In the event of a voluntary or involuntary liquidation, dissolution or winding up of the Company, each series of preferred stock will rank on parity with one another and rank senior to the Company’s common stock with respect to the payment of the dividends and the distribution of assets. (dollars in thousands)Class of StockIssuance DateShares Issued and OutstandingCarrying ValueContractual RateRedemption Eligible Date (1)Fixed to