Redwood Trust, Inc. (NYSE: RWT) priced $185 million in aggregate principal amount of 7.00% convertible senior notes due 2030 in a private offering to qualified institutional buyers under Rule 144A, according to a press release. The offering was increased from an initial size of $150 million.

The notes are senior unsecured obligations and are expected to close on September 15, 2026. Interest will be paid semi-annually on March 15 and September 15 each year, beginning March 15, 2027. The notes mature on September 15, 2030.

The initial conversion rate is 204.0608 shares of common stock per $1,000 principal amount, equivalent to a conversion price of approximately $4.90 per share, representing a premium of approximately 35.0% over Redwood's closing stock price on September 10, 2026. Redwood also granted initial purchasers an option to buy up to an additional $20 million in principal amount within 13 days of issuance.

Redwood plans to use approximately $129.29 million of net proceeds to repurchase approximately $123.79 million in aggregate principal amount of its existing 7.75% convertible senior notes due 2027. The company also intends to use approximately $20 million of net proceeds to repurchase 5,509,641 shares of its common stock in privately negotiated transactions. Remaining proceeds are designated for general corporate purposes, including funding its Sequoia, Aspire, and CoreVest mortgage banking platforms and its Redwood Investments portfolio.

The notes and any shares issuable upon conversion have not been registered under the Securities Act of 1933 and may not be offered or sold absent an applicable exemption from registration requirements.