July 10, 2019 – Further to the Court's bidding procedures order [Docket No. 456], the Debtors notified the Court that, absent any further qualified bids: (i) a pair of designated stalking horse bidders had been named as successful bidders in respect of the Debtors' Forward Business and Reverse Business segments, respectively, and (ii) an auction scheduled for July 11th had been cancelled [Docket No. 830]. A sale hearing remains scheduled for August 7, 2019.
On June 18, 2019, the Debtors notified the Court that it had (i) designated New Residential Investment Corp. ("New Residential") as the stalking horse bidder in respect of Ditech Financial LLC, the Debtors' forward mortgage servicing and originations business (the "Forward Business") and (ii) designated Mortgage Assets Management, LLC ("Mortgage Assets") as the stalking horse bidder for Reverse Mortgage Solutions, Inc., the Debtors' reverse mortgage business (the "Reverse Business") [Docket Nos. 722 and 724, respectively].
New Residential has offered consideration estimated at $1.055bn for the Forward Business (based on unaudited March 31, 2019 financial statements, of which $613.0mn would be used to repay DIP financing).
Mortgage Assets has offered consideration estimated at $762.4mn in respect of the Reverse Business (based on unaudited March 31, 2019 financial statements, of which $616.0mn would be used to repay DIP financing).
Further Background
In a separate June 18, 2019 filing [Docket No. 725], the Debtors detailed estimated distributable proceeds (net of DIP financing) of $501.0mn and $73.0mn for the forward Forward Business and the Reverse Business, respectively. That filing also makes it clear that these sales do not yet have a definitive green light from the Debtors' term lenders, stating: "…in accordance with the Restructuring Support Agreement, dated as of February 8, 2019, the Term Lenders have agreed to issue an election notice confirming their support of the Debtors’ decision to pursue a Sale Transaction. As of the date hereof, such an election will be supported by approximately 40% of the Term Lenders. Such election will not become effective until Term Lenders holding 662/3% of the aggregate outstanding principal amount of the Term Loans support the election."
The New Residential Asset Purchase Agreement (the "NRZ APA")
The estimated purchase price payable to the Debtors under the NRZ APA, assuming the Debtors’ March 31, 2019 balance sheet, is approximately $1,055.0mn in cash prior to repayment of approximately $613.0mn of principal amounts outstanding under the DIP facilty.
The Stalking Horse Bid Protections for the Stalking Horse Bidder are as follows:
- In the event that the Stalking Horse Agreement is terminated because Sellers enter into a definitive agreement with respect to an Alternative Transaction, Sellers shall pay Buyer an initial termination payment of $10.0mn, expense reimbursement of up to $6.0mn and, upon consummation of an Alternative Transaction, a remaining termination payment of $20.0mn;
- In the event that Buyer terminates the Stalking Horse Agreement because there has been a material breach of the Stalking Horse Agreement by any Seller, Sellers shall pay Buyer an initial termination payment of $10.0mn, expense reimbursement of up to $6.0mn and, if an Alternative Transaction is consummated within three hundred sixty-five (365) days following such termination, a remaining termination payment of $20.0mn;
- In the event that the Stalking Horse Agreement is terminated because the Term Loan Lender Approval has not been delivered by the date that is five (5) Business Days following the date of the Stalking Horse Agreement, Sellers shall pay Buyer the expense reimbursement of up to $6.0mn;
- In the event that an Alternative PLS Transaction6 is consummated prior to the Outside Date, Sellers shall, on the first (1st) business day following such consummation, pay Buyer a break-up fee in an amount equal to $3.8mn. Buyer will not be entitled to receive expense reimbursement or the $30.0mn termination payment solely based upon the entry into or consummation of an Alternative PLS Transaction; and
- The purchase price in a competing bid for the Acquired Assets shall not be considered a Qualified Bid unless such bid (a) provides for consideration to the Debtors’ estates of at least $30.0mn for payment of the termination payment and up to $6.0mn for payment of the expense reimbursement, and (b) otherwise constitutes a higher or better bid taking into account all of the consideration provided to the Debtors’ estates under the Stalking Horse Agreement, including the Purchase Price, as determined by the Sellers (in the due exercise of their fiduciary duties and applicable Law).
The Mortgage Assets Asset Purchase Agreement (the "Mortgage Assets APA")
The estimated purchase price payable to the Debtors under the Mortgage Assets APA, assuming the Debtors’ March 31, 2019 balance sheet, is currently estimated to be approximately $762.0mn, based upon management’s estimates, approximately $616.0mn of which would be available to pay DIP facility obligations.
The Stalking Horse Bid Protections for the Stalking Horse Bidder include:
- Reimbursement up to $4.0mn of the Stalking Horse Bidder’s reasonable and documented expenses incurred in connection with the transactions (the “Expense Reimbursement”); plus
- A fee of $4.0mn (the “Initial Break-Up Fee”); plus
- A deposit of $8.5mn (the “Remaining Break-Up Fee” and, together with the Initial Break-Up Fee, the “Break-Up Fee”) by the Sellers into an escrow account.
- If Sellers have exercised their option under the Stalking Horse Agreement (the “Ginnie Option”) to require the Stalking Horse Bidder to purchase all of Sellers rights and obligations in connection with administering and servicing any forward residential mortgage loans secured by a 1-4 family residential property that is guaranteed by Ginnie Mae, and the related advances, the Stalking Horse Bidder shall be entitled to have the (i) Expense Reimbursement increased to up to $4.25; (ii) Initial Break-Up Fee increased to $5.25mn; and (iii) Remaining Break-Up Fee increased to $9.7mn.
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The post Ditech Holding Corporation – Names Stalking Horses as Successful Bidders for Forward and Reverse Mortgage Businesses, Estimated $574mn of $1.8bn Sales Proceeds Available for Distribution to Creditors appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.