Home Loan Servicing Solutions, Ltd., an affiliate of the
mortgage servicer Ocwen Financial Corp., said Monday it called off
its proposed merger with New Residential Investment Corp. and
instead will sell substantially all of its assets to New
Residential for a lower price.
The asset sale is worth $17.08 per HLSS share, or approximately
$1.2 billion, the companies said in a statement. That is a
reduction from the price of $18.25 in the earlier merger agreement,
which was announced in February.
The boards of the two companies have already approved the asset
sale, which was concluded with the signing of the agreement, the
companies said.
New Residential is affiliated with another large
mortgage-servicing company, Nationstar Mortgage Holdings Inc.
Nationstar, which is controlled by the large investment firm
Fortress Investment Group LLC, has acquired billions of dollars of
mortgage-servicing rights from Ocwen, which has run into serious
regulatory problems over the past two years.
Ocwen, which had to consent to the transaction, has agreed to
its terms, a company spokesman said.
Ocwen has been threatened with a delisting by the NYSE because
it has missed several deadlines for filing its 2014 earnings
statements. Ocwen has said that it has been trying to clear
problems related to HLSS's financial status.
Ocwen said earlier that it is looking into whether HLSS has the
"ability to continue to meet its obligations to fund new servicing
advances." Ocwen also said earlier that "a failure by HLSS to fund
new servicing advances could have a material negative impact on the
company's financial condition."
In a separate statement Monday, Ocwen said it still needs more
time before filing its required 2014 financial statements.
HLSS provides financing for Ocwen's mortgage servicing rights
and advances it makes to mortgage securities investors.
In a significant step in Monday's announcement, New Residential
said that it had agreed to extend the contracts allowing Ocwen to
service the mortgage rights of HLSS and, on a two-year agreement,
to not transfer servicing rights away from Ocwen.
Michael Nierenberg, chief executive officer of New Residential,
said the extension would "help promote a mutually beneficial
partnership between the two companies."
Write to James Sterngold at james.sterngold@wsj.com
Access Investor Kit for Fortress Investment Group LLC
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US34958B1061
Access Investor Kit for Ocwen Financial Corp.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US6757463095
Subscribe to WSJ: http://online.wsj.com?mod=djnwires