NEW YORK ( TheStreet) -- Orchid Island Capital ( ORC) looks to set to limp to market on Friday after cutting the size of its planned IPO yet again.

The Vero Beach, Fla.-based company originally filed to raise $115 million, then dialed that back to $83 million before dropping down to $42 million at the last minute on Thursday. The specialty finance company is now looking to sell 5.2 million shares at a price range of $8.00, well below the original $10-$12 range.

The company invests in residential mortgage-backed securities and then passes through the interest as well as earning value through capital appreciation. Seems simple, until investors start trying to untangle exactly who is running Orchid Island Capital and uncovers the history of this company and the various lawsuits associated with it.

Just tracing the names of entities associated with the company is a challenge. Back in 2005, Bimini Mortgage bought Opteum Financial, renamed it Orchid Island TRS, then renamed it again, calling the company Mortco TRS, a wholly own REIT. In 2006, Bimini Mortgage changed its name to Opteum Inc. In 2007, Mortco closed and Opteum changed its name to Bimini Capital Management ( BMNM.OB). Bimini was delisted by the New York Stock Exchange in 2007.

Now Bimini Advisors, a wholly owned subsidiary of Bimini Capital Management, is managing and advising Orchid Island Capital. That's a potential problem since Bimini and Orchid Island Capital are in the same business and there's bound to be a conflict of interest between these two companies. They will be competing to buy the exact same bonds from Fannie Mae and Freddie Mac. Will Bimini choose the better deals for itself or will it be generous and give the best bonds to Orchid Island Capital?

Then there are the lawsuits. In 2007, William Kornfeld filed a lawsuit against Opteum Inc., complaining that the company wasn't upfront in its 2004 IPO. Opteum insisted it would fight the case and accused Kornfeld of suing many toxic mortgage companies. However, Opteum settled with Kornfeld for $2 million, the amount he said he lost as a result of his investment in Opteum.

Bimini is also being sued by Hildene Capital Management and R. Davis Howe for losses suffered after they purchased Preferred Term Securities XX issued by Bimini. Mass Mutual ( MCI) sent a complaint against Opteum Financial this past March, but so far has not initiated litigation.

So, if investors aren't scared off by the conflict of interest or the numerous lawsuits, even one regarding an IPO, then there's the very generous payout. Bimini has received 75,000 shares of Orchid Island Capital and $3 million in order to buy another 30,950 shares. Bimini originally was to get 4 million shares and is also receiving warrants to buy 2.7 million shares. So $21 million worth of stock goes to Bimini for a cost of $1.2 million. Not a bad day for Bimini. Maybe it can use the proceeds for its litigation?

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