FORT WASHINGTON, Pa.,
Oct. 20, 2017 /PRNewswire/ -- Walter
Investment Management Corp. ("Walter" or the "Company") (NYSE:
WAC.BC) today announced that it has entered into a Restructuring
Support Agreement (the "Noteholder RSA") with certain holders (the
"Noteholders") of more than 50% by principal amount of the
Company's 7.875% Senior Notes due 2021 (the "Senior Notes") that
contemplates a financial restructuring which, if consummated, is
expected to strengthen the Company's balance sheet. The Company
also announced that it has entered into an Amended and Restated
Restructuring Support Agreement (the "Term Lender RSA" and,
collectively with the Noteholder RSA, the "RSAs") with certain
lenders (the "Lenders") holding term loans (the "Term Loans") under
the Company's Amended and Restated Credit Agreement, dated as
of December 19, 2013 (the "Existing Credit Agreement"), in an
amount more than 48% of the outstanding Term Loans. The RSAs will
become effective once holders of 662/3% in the aggregate
of Senior Notes and Term Loans, respectively, become party to the
applicable RSA (the "Support Effective Date"). The parties may
terminate the RSAs if the Support Effective Date does not occur
before October 25, 2017.
Through consummation of the transactions contemplated in the
RSAs, the Company expects to reduce its outstanding corporate debt
as of June 30, 2017 by approximately
$700 million and enhance its
financial flexibility as it continues the ongoing transformation of
its business. In addition to the recoveries to the Company's
Lenders and Noteholders, as described below, the RSAs also
contemplate a recovery for the holders (the "Convertible
Noteholders") of the Company's 4.50% convertible senior
subordinated notes due 2019 and the Company's existing common
stockholders if the requisite number of Convertible Noteholders
support the restructuring.
The Company plans to implement the terms of the RSAs by
soliciting votes from the Lenders, the Noteholders, and the
Convertible Noteholders on a pre-packaged chapter 11 plan of
reorganization. Following the solicitation, which is intended to
begin next month, the Company intends to voluntarily file a
pre-packaged plan of reorganization under chapter 11 of the United
States Bankruptcy Code in late November
2017, to execute the various transactions contemplated by
the RSAs. Walter intends to complete the reorganization process on
an expedited basis, potentially concluding by the end of 2017 and
under all circumstances not later than January 31, 2018. Under the contemplated plan for
reorganization agreed to in the RSAs (the "Prepackaged Plan"), it
is intended that only the holding company will file for
reorganization under chapter 11. Walter's operating entities,
including Ditech Financial LLC and Reverse Mortgage Solutions,
Inc., are expected to remain out of chapter 11 and continue their
operations in the ordinary course throughout the consummation of
the financial restructuring transactions. The Company believes it
has ample liquidity to support its businesses and the costs of the
restructuring.
Anthony Renzi, Walter's President
and Chief Executive Officer, commented, "We are making significant
progress transforming our business, and the financial restructuring
contemplated by the agreements we have reached with our lenders and
noteholders are a key part of our plans. Through these agreements,
we expect to quickly restructure our debt while ensuring that
business will continue as normal. The support of our lenders
demonstrates their confidence in our business, and we believe that
we are on the right track to emerge from this process better
positioned for continued growth and success."
Mr. Renzi continued, "The fundamentals of our core business
remain solid and we expect demand for our quality products,
services and single source convenience to continue to grow. As we
move forward we will continue to focus on serving our customers by
enabling their dreams of homeownership and caring for them
throughout their homeownership lifecycle. We appreciate the
continued support of our business counterparties and lenders, and
we thank our employees for their continued hard work and
dedication. We look forward to completing this financial
restructuring so we can continue to execute on our strategic
initiatives as we seek to create a brighter future for our company
and our customers."
The Company's strategic initiatives include a focus on its
"core" business, which in general is the origination and servicing
of GSE and government mortgage loans, and the servicing of reverse
mortgage loans. The Company is continuing its efforts to reduce
costs, improve operational efficiency and further enhance its
originations business. The Company is also making progress in
improving the performance and the overall profitability of its
servicing business, including moving more toward a "fee for
service" model and away from heavy investment in mortgage servicing
rights.
The terms of the RSAs include the following:
- The Company and the Lenders will become bound by the Amended
and Restated Credit Facility and receive, in full and final
satisfaction of their Allowed Term Loan Claims on the effective
date of the Prepackaged Plan (the "Plan Effective Date"), their pro
rata share of (i) term loans under the Amended and Restated Credit
Facility Agreement (such term loans to be in an aggregate principal
amount equal to the term loans then outstanding under the Credit
Agreement as of the Plan Effective Date), and (ii) any accrued and
unpaid interest under the Credit Agreement as of the Plan Effective
Date; and
- Noteholders will receive (i) $250
million in new Second Lien Notes due December 2024 (the "Second Lien Notes"), and (ii)
$100 million in Mandatorily
Convertible Preferred Stock (the "Preferred Stock"). The Preferred
Stock would convert into 73% of the Common Stock pursuant to agreed
conversion terms, but would be subject to dilution by shares
issuable pursuant to a management incentive plan, shares issued
after the effective date of the restructuring transactions, and by
shares issued (if any) under the 10-year Warrants (the "Warrants")
expected to be received by the Convertible Noteholders and existing
common stockholders.
The Prepackaged Plan is expected to provide for recovery to the
Company's existing common stockholders, who are expected to share
50/50 with the Company's existing Convertible Noteholders in a
recovery comprising an aggregate of approximately 27% (13.5% each)
of the Company's total equity issued on the Plan Effective Date,
after giving effect to conversion of the Preferred Stock and
subject to dilution by any shares issued after the effective date
of the restructuring transactions or pursuant to a management
incentive plan; however, upon consummation of the restructuring
transactions, the Convertible Noteholders and the existing common
stockholders would initially receive, in aggregate, 100% of the
Company's new common stock and the Warrants, and the Noteholders
would initially receive 100% of the Preferred Stock and the Second
Lien Notes.
While there can be no assurance that the Warrants will become
"in the money" and therefore exercisable, the Warrants are intended
to provide the Convertible Noteholders and the Company's existing
stockholders additional incremental recovery should the Warrants
become exercisable, as described further in the RSAs.
The recovery of the Company's existing stockholders and
Convertible Noteholders is dependent upon Convertible Noteholders
holding in excess of the requisite principal amount of the
Convertible Notes voting to approve the Prepackaged Plan. If such
approval is not obtained, existing Company stockholders and the
Convertible Noteholders will not receive any recovery.
A summary of the material terms of the RSAs will be included in
a Current Report on Form 8-K being filed by the Company with
the Securities and Exchange Commission.
Advisors
Weil, Gotshal & Manges LLP is acting as legal
counsel, Houlihan Lokey is acting as investment banking
debt restructuring advisor and Alvarez & Marsal North
America, LLC is acting as financial advisor to the Company in
connection with the financial restructuring.
Kirkland & Ellis LLP is acting as legal counsel and FTI
Consulting Inc. is acting as financial advisor to the consenting
term lenders.
Milbank, Tweed, Hadley & McCloy LLP is acting as legal
counsel and Moelis & Company LLC is acting as financial advisor
to the consenting senior noteholders.
About Walter Investment Management Corp.
Walter Investment Management Corp. is an independent
servicer and originator of mortgage loans and servicer of reverse
mortgage loans. Based in Fort Washington, Pennsylvania, the Company has approximately
4,400 employees and services a diverse loan portfolio. For more
information about Walter Investment Management Corp., please
visit the Company's website
at www.walterinvestment.com. The information on the
Company's website is not a part of this release.
Cautionary Statements Regarding Forward-Looking
Information
Certain statements in this press release constitute
"forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended. Statements that are
not historical fact are forward-looking statements. Certain of
these forward-looking statements can be identified by the use of
words such as "believes," "anticipates," "expects," "intends,"
"plans," "projects," "estimates," "assumes," "may," "should,"
"could, " "shall," "will," "seeks," "targets," "future," or other
similar expressions. Such forward-looking statements involve known
and unknown risks, uncertainties and other important factors, and
our actual results, performance or achievements could differ
materially from future results, performance or achievements
expressed in these forward-looking statements. Such statements
include, but are not limited to, statements relating to the
potential transactions contemplated by the RSAs, descriptions of
management's strategy, plans, objectives, expectations, or
intentions and descriptions of assumptions underlying any of the
above matters and other statements that are not historical
fact.
Forward-looking statements are subject to significant known and
unknown risks, uncertainties, challenges and other important
factors, and the Company's actual results, performance or
achievements could differ materially from future results,
performance or achievements expressed in these forward-looking
statements. These forward-looking statements are based on the
Company's current beliefs, intentions and expectations and are not
guarantees or indicative of future performance, nor should any
conclusions be drawn or assumptions be made as to any potential
outcome of any proposed transactions the Company considers. Risks
and uncertainties relating to the proposed financial restructuring
include: the ability of the Company to comply with the terms of the
RSAs, including completing various stages of the restructuring
within the dates specified by the RSAs; the ability of the Company
to obtain requisite support for the restructuring from various
stakeholders; the ability of the Company to maintain the listing of
its common stock on the New York Stock Exchange; the ability of the
Company to successfully execute the transactions contemplated by
the RSAs without substantial disruption to the business of, or a
chapter 11 bankruptcy filing by, one or more of its primary
operating or other subsidiaries; and the effects of disruption from
the proposed restructuring making it more difficult to maintain
business, financing and operational relationships, to retain key
executives and to maintain various licenses and approvals necessary
for the Company to conduct its business. Important assumptions and
other important factors that could cause actual results to differ
materially from those forward-looking statements include, but are
not limited to, those factors, risks and uncertainties described in
more detail under the heading "Risk Factors" and elsewhere in the
Company's annual and quarterly reports, including amendments
thereto, and other filings with the Securities and Exchange
Commission.
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SOURCE Walter Investment Management Corp.
