8-K: Current report filing

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

____________


FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report: December 26, 2000


DYNEX CAPITAL, INC.
(Exact Name of Registrant as Specified in Charter)


Virginia 1-9819 52-1549373
(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)

4551 Cox Road, Suite 300, Glen Allen, Virginia 23060
(Address of Principal Executive Offices) (Zip Code)


(804) 217-5800
(Registrant's telephone number, including area code)



Item 5. OTHER EVENTS.


As previously disclosed in other filings, on November 7, 2000, the Company
and California Investment Fund, LLC ("CIF") entered into an Agreement and Plan
of Merger, dated as of November 7, 2000 (the "Merger Agreement"), by and among,
the Company, CIF and DCI Acquisition Corporation, a newly created subsidiary of
CIF. The Merger Agreement provides for CIF to acquire 100% of the equity of the
Company for a purchase price of $90 million in cash.

On December 22, 2000, the Company delivered a letter to CIF which declared
that CIF was in breach of the terms of the Merger Agreement. The breach is
related to CIF's obligation to provide certain evidence of financing of the
transaction in accordance with the terms of the Merger Agreement. In the letter,
the Company also reserved its rights to terminate the Merger Agreement if CIF
does not agree to satisfy certain conditions relating to the obtaining of
financing and other matters.

.



Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.

(c) Exhibits

99.1 Dynex Capital, Inc. Press Release, dated December 22, 2000.






SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.


Date: December 26, 2000 DYNEX CAPITAL, INC.


By: /s/
Thomas H. Potts
President




EXHIBIT INDEX

Number Description Method of Filing

99.1 Dynex Capital, Inc. Press Release, Filed herewith
dated December 22, 2000.



Exhibit 99.1



PRESS RELEASE


FOR IMMEDIATE RELEASE CONTACT: Kathy Fern
December 22, 2000 804-217-5800


DYNEX CAPITAL, INC.
UPDATES MARKET ON STATUS OF MERGER WITH
CALIFORNIA INVESTMENT FUND


Dynex Capital, Inc. (NYSE: DX) announced today that in a letter to
California Investment Fund, LLC ("CIF") dated December 22, 2000, the Company
declared CIF in breach of the terms of the merger agreement entered into between
the parties on November 7, 2000. The breach relates to CIF's obligation to
provide certain evidence of financing in accordance with the terms of the merger
agreement. In the letter, Dynex reserved the right to terminate the merger
agreement with CIF for such breach if CIF does not agree to and satisfy certain
conditions relating to obtaining financing and other matters. CIF has until 5:00
PM Eastern Time on Wednesday, December 27, 2000 to agree to the terms of the
letter.

Separately, as previously reported, the Company's credit facility agented
by Chase Bank of Texas, related to the letters of credit on its multifamily
tax-exempt bonds, expired as of the end of October. The Company has been unable
to secure a formal extension of such agreement, but the lenders thereunder have
not taken any adverse actions at this time.

The Company also announced that it will not declare a dividend to the
Series A, Series B and Series C preferred shareholders for the fourth quarter of
2000. Dividends on the preferred stock are cumulative and the Company is not
permitted to pay any dividends on its common stock until the cumulative
preferred dividends have been declared and paid in full. The preferred stock
dividends are current through the July 31, 1999 payment date. The Company also
reported that it will not pay a dividend on its common stock for the quarter.

Dynex Capital, Inc. is a financial services company that elects to be
treated as a real estate investment trust (REIT) for federal income tax
purposes. Note: This document contains "forward-looking statements"(within the
meaning of the Private Securities Litigation Act of 1995) that inherently
involve risks and uncertainties. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of unforeseen external factors. As discussed in the Company's filings
with the SEC, these factors may include, but are not limited to, changes in
general economic conditions, disruptions in the capital markets, fluctuations in
interest rates, increases in costs and other general competitive factors.

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