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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities and Exchange Act of 1834
(Amendment No. 4)
Chimera Investment Corporation
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(Name of Issuer)
Common Stock, par value $.01 per share
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(Title of Class of Securities)
16934Q109
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(CUSIP Number)
Allison Bennington, Esq.
ValueAct Capital
435 Pacific Avenue, Fourth Floor
San Francisco, CA 94133
(415) 362-3700
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(Name, address and telephone number of Person
Authorized to Receive Notices and Communications)
Christopher G. Karras, Esq.
Dechert LLP
Cira Centre
2929 Arch Street
Philadelphia, PA 19104-2808
(215) 994-4000
October 21, 2008
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box [ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Rule 240.13d-7 for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
This information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1834 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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SCHEDULE 13D
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CUSIP NO. 16934Q109 Page 2 of 12
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
ValueAct Capital Master Fund III, L.P.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS (See Instructions)*
WC*
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
British Virgin Islands
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7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 4,532,628**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
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10. SHARED DISPOSITIVE POWER
4,532,628**
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,532,628**
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [ ]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.6%
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14. TYPE OF REPORTING PERSON
PN
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*See Item 3
**See Items 2 and 5
SCHEDULE 13D
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CUSIP NO. 16934Q109 Page 3 of 12
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
VA Partners III, LLC
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS*
00*
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 4,532,628**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
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10. SHARED DISPOSITIVE POWER
4,532,628**
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,532,628**
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [x]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.6%
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14. TYPE OF REPORTING PERSON
00 (LLC)
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*See Item 3
**See Items 2 and 5
SCHEDULE 13D
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CUSIP NO. 16934Q109 Page 4 of 12
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
ValueAct Capital Management, L.P.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS*
00*
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 4,532,628**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
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10. SHARED DISPOSITIVE POWER
4,532,628**
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,532,628**
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [x]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.6%
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14. TYPE OF REPORTING PERSON
PN
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*See Item 3
**See Items 2 and 5
SCHEDULE 13D
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CUSIP NO. 16934Q109 Page 5 of 12
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
ValueAct Capital Management, LLC
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS*
00*
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 4,532,628**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
4,532,628**
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,532,628**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [x]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.6%
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14. TYPE OF REPORTING PERSON
00 (LLC)
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*See Item 3
**See Items 2 and 5
SCHEDULE 13D
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CUSIP NO. 16934Q109 Page 6 of 12
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
ValueAct Holdings, L.P.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS*
00*
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 4,532,628**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
4,532,628**
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,532,628**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [x]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.6%
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14. TYPE OF REPORTING PERSON
PN
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*See Item 3
**See Items 2 and 5
SCHEDULE 13D
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CUSIP NO. 16934Q109 Page 7 of 12
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1. NAME OF REPORTING PERSON/S.S. OR I.R.S. INDENTIFICATION NO. OF ABOVE
PERSON (entities only)
ValueAct Holdings GP, LLC
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [X]
(b) [ ]
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3. SEC USE ONLY
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4. SOURCE OF FUNDS*
00*
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7. SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8. SHARED VOTING POWER
BENEFICIALLY 4,532,628**
OWNED BY EACH ----------------------------------------------------------
PERSON WITH 9. SOLE DISPOSITIVE POWER
0
----------------------------------------------------------
10. SHARED DISPOSITIVE POWER
4,532,628**
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,532,628**
-----------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES [x]
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.6%
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14. TYPE OF REPORTING PERSON
00 (LLC)
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*See Item 3
**See Items 2 and 5
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CUSIP NO. 16934Q109 Page 8 of 12
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THE PURPOSE OF THIS AMENDMENT NO. 4 TO SCHEDULE 13D IS TO AMEND THE
OWNERSHIP REPORTS OF THE REPORTING PERSONS AND TO AMEND THE PURPOSE OF
TRANSACTION SECTION. THE INFORMATION BELOW SUPPLEMENTS THE INFORMATION
PREVIOUSLY PROVIDED.
Item 4. Purpose of Transaction
On October 21, 2008, the Reporting Persons sent a letter (the "Letter")
to the Board of Directors of the Issuer, expressing the Reporting Persons'
strong disapproval of the Issuer's proposed dilutive stock offering. A copy
of the Letter is attached as Exhibit 2 to this report and is incorporated
herein by reference.
Item 7. Material to Be Filed as Exhibits
(1) Joint Filing Agreement.
(2) Letter from Reporting Persons to Issuer's Board of Directors
dated October 21, 2008.
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CUSIP NO. 16934Q109 Page 9 of 12
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SIGNATURE
After reasonable inquiry and to the best of his knowledge and
belief, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below on this Schedule 13D hereby constitutes and appoints Jeffrey W. Ubben,
George F. Hamel, Jr., G. Mason Morfit and Allison Bennington, and each of
them, with full power to act without the other, his or its true and lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution, for him or it and in his or its name, place and stead, in any
and all capacities (until revoked in writing) to sign any and all amendments
to this Schedule 13D, and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary fully to all intents and purposes as he or it might
or could do in person, thereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
ValueAct Capital Master Fund III L.P., by
VA Partners III, LLC, its General Partner
By: /s/ George F. Hamel, Jr.
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Dated: October 21, 2008 George F. Hamel, Jr., Chief Operating Officer
VA Partners III, LLC
By: /s/ George F. Hamel, Jr.
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Dated: October 21, 2008 George F. Hamel, Jr., Chief Operating Officer
ValueAct Capital Management, L.P., by
ValueAct Capital Management, LLC its
General Partner
By: /s/ George F. Hamel, Jr.
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Dated: October 21, 2008 George F. Hamel, Jr., Chief Operating Officer
ValueAct Capital Management, LLC
By: /s/ George F. Hamel, Jr.
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Dated: October 21, 2008 George F. Hamel, Jr., Chief Operating Officer
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CUSIP NO. 16934Q109 Page 10 of 12
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ValueAct Holdings, L.P., by
ValueAct Holdings GP, LLC, its
General Partner
By: /s/ George F. Hamel, Jr.
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Dated: October 21, 2008 George F. Hamel, Jr., Chief Operating Officer
ValueAct Holdings GP, LLC
By: /s/ George F. Hamel, Jr.
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Dated: October 21, 2008 George F. Hamel, Jr., Chief Operating Officer
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CUSIP NO. 16934Q109 Page 11 of 12
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Exhibit 1
JOINT FILING UNDERTAKING
The undersigned parties hereby agree that the Schedule 13D filed herewith
(and any amendments thereto) relating to the Common Stock of Chimera
Investment Corporation is being filed jointly on behalf of each of them with
the Securities and Exchange Commission pursuant to Section 13(d) of the
Securities Exchange Act of 1834, as amended.
ValueAct Capital Master Fund III L.P., by
VA Partners III, LLC, its General Partner
By: /s/ George F. Hamel, Jr.
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Dated: October 21, 2008 George F. Hamel, Jr., Chief Operating Officer
VA Partners III, LLC
By: /s/ George F. Hamel, Jr.
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Dated: October 21, 2008 George F. Hamel, Jr., Chief Operating Officer
ValueAct Capital Management, L.P., by
ValueAct Capital Management, LLC its
General Partner
By: /s/ George F. Hamel, Jr.
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Dated: October 21, 2008 George F. Hamel, Jr., Chief Operating Officer
ValueAct Capital Management, LLC
By: /s/ George F. Hamel, Jr.
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Dated: October 21, 2008 George F. Hamel, Jr., Chief Operating Officer
ValueAct Holdings, L.P., by
ValueAct Holdings GP, LLC, its
General Partner
By: /s/ George F. Hamel, Jr.
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Dated: October 21, 2008 George F. Hamel, Jr., Chief Operating Officer
ValueAct Holdings GP, LLC
By: /s/ George F. Hamel, Jr.
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Dated: October 21, 2008 George F. Hamel, Jr., Chief Operating Officer
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CUSIP NO. 16934Q109 Page 12 of 12
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Exhibit 2
October 21, 2008
VIA FACSIMILE
The Board of Directors
Chimera Investment Corporation
1211 Avenue of the Americas, Suite 2902
New York, NY 10036
Dear Sirs,
As owners of over 11.6% of existing Chimera shares through ValueAct Capital
Master Fund III, L.P., ValueAct Capital believes the proposed massively
dilutive offering of 250 million new Chimera shares at a significant discount
to current book value is misguided and exhibits complete disregard for
current Chimera shareholders.
After meeting with management, we agreed with the thesis that there is a
significant opportunity to buy low-risk mortgage assets at a significant
discount because of technical market dislocations. In fact, that same thesis
was the impetus behind our current ownership of Chimera. However, by
essentially forcing a sale of existing Chimera equity at a significant
discount to book, you are subjecting existing shareholders to the same market
squeeze you plan on exploiting with the new capital. We are disappointed
that a more thoughtful approach is not being pursued to better protect
existing, and in our case specifically, loyal Chimera shareholders.
Management was proactive in the third quarter to deleverage the portfolio,
and we believe that any opportunistic capital raise should be through a much
smaller, mildly dilutive offering.
Simply put, Chimera shareholders are being asked to accept permanent and
massive dilution, as the company attempts to sell 250 million shares on a
base of 36 million existing, at the worst possible time to be a seller. We
characterize this offering as one of laziness and conflicts of interest,
considering the initial prospectus was filed on June 3, 2008 when Chimera's
stock was roughly $13 while now the company is prepared to print a hugely
upsized deal at $3 to $4 per share. A more measured approach would still
enable the company to pursue business opportunities while protecting existing
shareholders.
In conclusion, we urge Chimera's Board and management team to re-think the
timing and magnitude of this proposed offering.
Sincerely,
Jeffrey W. Ubben
Chief Executive Officer
ValueAct Capital