PHH Corp., an outsource provider of mortgage and vehicle fleet management services, announced that it has given a notice of termination to General Electric Capital Corp., a unit of General Electric, pursuant to the merger agreement dated March 15, 2007, between PHH and GECC.
As previously disclosed, the agreement provided that a wholly-owned subsidiary of GECC would merge with and into PHH, and that immediately following the closing of the merger, GECC would sell PHH’s mortgage business to Pearl Mortgage Acquisition 2 LLC, an affiliate of The Blackstone Group. PHH says it terminated the merger agreement because this step was not completed by Dec. 31.
Accoring to PHH, it was a condition to closing of the merger that Pearl Acquisition be ready, willing and able to consummate the mortgage business sale. PHH has been informed that Pearl Acquisition was not able to obtain the requisite debt financing to consummate the sale. Pursuant to the terms of the merger agreement, PHH has requested payment of $50 million from an affiliate of The Blackstone Group as a termination fee.
“I am disappointed that we could not conclude the transactions contemplated by the merger agreement,” says A. B. Krongard, non-executive board chairman of Mt. Laurel, N.J.-based PHH. “The board will determine in due course whether to continue to explore the company’s strategic alternatives. The board remains focused and committed to delivering value for our stockholders regardless of the decision.”