Walter Investment Management Corp. said Monday that it has agreed to buy Green Tree Credit Solutions in a deal valued at $1.065 billion. St. Paul, Minn.-based Green Tree is a loan servicer. Walter Investment will issue about 1.8 million shares of stock to Green Tree, assume about $20 million of Greentree existing debt and issue $765 million of new debt. Centerbridge Partners is the seller. The deal is expected to be completed in third quarter. Credit Suisse advised Walter Investment while Morgan Stanley advised Green Tree. BofA Merrill Lynch acted as financial advisor to the seller.
Walter Investment Management Corp. (NYSE Amex: WAC) (“Walter Investment” or the “Company”) today announced it has entered into a definitive agreement to purchase GTCS Holdings LLC (“Green Tree”) in a transaction valued at $1.065 billion. Green Tree, based in St. Paul, Minnesota, is a leading independent, fee-based business services company which provides high-touch, third-party servicing of credit-sensitive consumer loans. Green Tree brings to Walter Investment a high-growth platform, with long-standing relationships with a diverse, blue chip customer base, as well as a highly successful management team which averages 25 years of industry experience. This acquisition will transform Walter Investment into a leading business services company focused on recurring, fee-based revenues generated from an “asset-light” platform.
“We believe that with the acquisition of Green Tree, Walter Investment will be uniquely positioned to capture a significant share of the growing specialty mortgage services sector,” said Mark J. O’Brien, Walter Investment’s Chairman and Chief Executive Officer. “Green Tree’s businesses, operational strategy, philosophy and culture are much the same as ours, providing opportunities to achieve both revenue and expense synergies as we pursue our common strategic objectives for growing the business and enhancing long-term shareholder value.”
“Green Tree has demonstrated its ability to capitalize on the cyclical and secular trends in the mortgage sector which we believe offer great opportunities for significant revenue growth,” continued Mr. O’Brien. “The ability to generate revenues from recurring, fee-based sources, with high operating margins from an asset-light platform is an especially attractive addition to our existing business model.”
“By bringing these two companies together, we expect to create greater financial flexibility and to build upon our substantial competitive advantages,” said Keith Anderson, Chief Executive Officer of Green Tree. “The Green Tree team has built a solid reputation as a best-in-class business services company. Now, by combining with Walter Investment, we will be able to operate within a larger and stronger capital base, enhancing our ability to execute our strategic objectives and meet our long-term financial goals.”
Approvals and Anticipated Closing
The Board of Directors of Walter Investment has unanimously approved the transaction. Walter Investment will issue approximately 1.8 million shares of common stock to the seller, assume approximately $20 million of existing Green Tree debt, and issue $765 million of new debt which has been fully committed by Credit Suisse and The Royal Bank of Scotland plc and which, together with cash, will be used to acquire the equity of Green Tree, repay existing Green Tree indebtedness and pay fees and expenses of the transaction. As a result of this transaction, Walter Investment will no longer qualify as a REIT. The transaction is subject to receipt of governmental approvals, third-party consents and the satisfaction of other customary closing conditions. The transaction is not subject to a financing condition. The Company expects to complete the transaction early in the third quarter of 2011.
Credit Suisse Securities (USA) LLC acted as exclusive financial advisor to Walter Investment and Simpson Thacher & Bartlett LLP provided legal counsel. Morgan Stanley & Co. Incorporated acted as financial advisor to Green Tree, while Willkie Farr & Gallagher LLP provided legal counsel. BofA Merrill Lynch acted as financial advisor to the seller.
Conference Call and Webcast
Walter Investment and Green Tree will host a joint webcast to discuss the transaction on Monday, March 28, 2011, at 10:00 a.m. EDT. The webcast will be accessible on the investor relations section of Walter Investment’s website at www.walterinvestment.com. The accompanying slide presentation will also be available on the Company’s website. A replay of the audio presentation will be available on the website for 30 days.
About Walter Investment Management Corp.
Walter Investment Management Corp. is an asset manager, mortgage servicer and mortgage portfolio owner specializing in less-than-prime, non-conforming and other credit-challenged mortgage assets. Based in Tampa, Fla., the Company currently has $1.8 billion of assets under management and annual revenues of approximately $180 million. The Company is currently structured as a real estate investment trust (“REIT”) and employs approximately 340 people. For more information about Walter Investment Management Corp., please visit the Company’s website at www.walterinvestment.com.
About Green Tree
Green Tree is one of the country’s leading home loan servicers and a full-service solutions provider which partners with credit-risk owners to help them maximize the performance of their loan portfolios. Based in St. Paul, Minn., the company services a diverse $37 billion loan portfolio consisting of over 745,000 loans and employs approximately 1,900 people. For more information, please visit the Green Tree website at www.greentreecreditsolutions.com