Onity Group Inc. sold a 15% stake in MSR Asset Vehicle LLC to Oaktree for $49.5 million, enhancing its capital structure.
Quiver AI Summary
Onity Group Inc. has successfully completed the sale of its 15% interest in MSR Asset Vehicle LLC to Oaktree Capital Management for $49.5 million. Following this transaction, Onity's subsidiary, PHH Mortgage Corporation, will continue as the exclusive subservicer for the MAV portfolio for five years and will manage future MSRs acquired by MAV. The sale is part of a broader strategy to strengthen Onity's capital structure, as proceeds from this sale, along with funds from a recent $500 million note offering, will be used to redeem over $570 million in higher-cost corporate debt. CEO Glen A. Messina expressed satisfaction with the deal, seeing it as a step towards enhanced earnings growth and financial flexibility while maintaining a strategic relationship with Oaktree.
Potential Positives
- The completion of the transaction with Oaktree Capital Management allowed Onity Group to generate $49.5 million in cash proceeds, enhancing its liquidity.
- Onity's subsidiary, PHH Mortgage Corporation, will continue to play a key role as the exclusive subservicer for the MAV portfolio, ensuring ongoing revenue streams from its subservicing relationship.
- The transaction facilitated the redemption of high-cost corporate debt, including $289 million of 7.875% Senior Notes and $285 million of 12.00%/13.25% Senior Second Lien Notes, improving Onity's capital structure and financial flexibility.
Potential Negatives
- The sale of a 15% interest in MSR Asset Vehicle LLC to Oaktree may indicate a need for cash liquidity or financial restructuring, which could raise concerns about the company's financial health.
- The requirement for MAV to observe a 36-month restriction on near-term MSR sales may limit growth opportunities or flexibility in the market for both Onity and MAV during this period.
- The raising of $500 million in Senior Notes at a high interest rate (9.875%) suggests potential challenges in the company's cost of borrowing and may indicate a reliance on high-cost debt financing.
FAQ
What recent transaction did Onity Group complete?
Onity Group completed a transaction selling its 15% interest in MSR Asset Vehicle LLC to Oaktree Capital for $49.5 million.
How will PHH Mortgage Corporation be involved following the sale?
PHH Mortgage Corporation will remain the exclusive subservicer of the existing MAV portfolio for an initial term of five years.
What are the financial impacts of this transaction?
The transaction allows Onity to reduce high-cost corporate debt and enhance its capital structure, supporting future earnings growth.
What is Onity's core business focus?
Onity Group is a leading non-bank mortgage servicer and originator, offering services through its brands PHH Mortgage and Liberty Reverse Mortgage.
Where can I find more information about Onity Group's transactions?
For more details, refer to Onity's Form 8-K filed with the SEC on December 3, 2024.
Disclaimer: This is an AI-generated summary of a press release distributed by GlobeNewswire. The model used to summarize this release may make mistakes. See the full release here.
Full Release
WEST PALM BEACH, Fla., Dec. 03, 2024 (GLOBE NEWSWIRE) --
Onity Group Inc.
(NYSE: ONIT) ("Onity" or the "Company"), a leading non-bank mortgage servicer and originator, today announced that it has completed the previously announced transaction with funds managed by Oaktree Capital Management, L.P. ("Oaktree") to sell the Company's 15% interest in MSR Asset Vehicle LLC ("MAV") to Oaktree for total cash proceeds of $49.5 million.
Onity's subsidiary, PHH Mortgage Corporation, will remain the exclusive subservicer of the existing MAV portfolio for an initial term of five years and will subservice the majority of new MSRs acquired by MAV. MAV also will be subject to certain restrictions on near-term MSR sales for 36 months following the closing of the MAV sale.
Concurrent with the closing of the transaction, the net proceeds from the offering of $500 million aggregate principal amount of 9.875% Senior Notes due 2029, which closed on November 6, 2024, together with additional cash from Onity, were released from escrow. The net proceeds from the offering and the MAV sale were used, together with cash on hand, to redeem all of PHH Mortgage Corporation's $289 million of outstanding 7.875% Senior Notes due 2026 and all of Onity's $285 million of outstanding 12.00%/13.25% Senior Second Lien Notes due 2027.
Glen A. Messina, Chair, President and CEO of Onity Group, said, "We are pleased to complete this transaction with Oaktree which facilitates a significant enhancement to our capital structure. The agreement with Oaktree enables us to continue our important subservicing relationship with MAV and meaningfully reduce our highest-cost corporate debt, which we expect will support future earnings growth and provide financial flexibility. We look forward to the continuation of our strategic partnership with Oaktree and to future opportunities."
For additional information regarding these transactions, please see the Company's Form 8-K filed with the Securities and Exchange Commission on December 3, 2024.
About Onity Group
Onity Group Inc. (NYSE: ONIT) is a leading non-bank mortgage servicer and originator providing solutions through its primary brands, PHH Mortgage and Liberty Reverse Mortgage. PHH Mortgage is one of the largest servicers in the country, focused on delivering a variety of servicing and lending programs. Liberty is one of the nation's largest reverse mortgage lenders dedicated to education and providing loans that help customers meet their personal and financial needs. We are headquartered in West Palm Beach, Florida, with offices and operations in the United States, the U.S. Virgin Islands, India and the Philippines, and have been serving our customers since 1988. For additional information, please visit
onitygroup.com
.
Forward-Looking Statements
This press release contains 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, including, but not limited to, statements relating to future earnings growth and future strategic opportunities with Oaktree. Forward-looking statements involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements, including the risks and uncertainties detailed in our reports and filings with the Securities and Exchange Commission ("SEC"), including our Annual Report on Form 10-K for the year ended December 31, 2023, and current reports and quarterly reports filed with the SEC since such date. Anyone wishing to understand Onity's business should review our SEC filings.
For Further Information Contact:
Dico Akseraylian, SVP, Corporate Communications
(856) 917-0066
mediarelations@onitygroup.com
