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CLOSING OUT NFI - surprise earnings report

HAVING TROUBLE PRINTING?
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UNEXPECTED EARNINGS ON NFI - CLOSING POSITION

KANSAS CITY, Mo.--(BUSINESS WIRE)--Feb. 27, 2006--NovaStar Financial, Inc. (NYSE:NFI - News), a residential lender and mortgage Real Estate Investment Trust, today reported quarterly and year-end results.

On February 10, 2006, NovaStar (NFI) announced that it was postponing its fourth-quarter earnings release and conference call until it obtained legal opinions to support certain tax positions, however it seems that the company has obtained these legal opinions and will make an earnings announcement tomorrow. This unforeseeable event makes us decide to close out the NFI spread as we never hold spreads over announcements. We are recommending closing of the NFI spread before the announcement. Subscribers should close spread position for a NET DEBIT of $1.20

The NovaStar fourth-quarter investor conference call is scheduled for 10:30 a.m. Central time (11:30 a.m. Eastern time) on February 28, 2006.

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