The shares were converted into the company’s common stock prior to the repurchase and then cancelled. There are 62,000 shares of the Series A preferred stock still outstanding. The preferred stock was issued as part of the compensation for Ocwen’s purchase of Homeward Residential Holdings from WL Ross in October.
In a press release issued by Ocwen, Wilbur Ross said, “The sale was made strictly for portfolio management reasons and does not reflect any change in our enthusiasm for Ocwen and its management or my continuing role on the Ocwen board of directors.” Ross formally joined the Ocwen board in March
To accomplish the transaction, Ocwen had to get the lenders on its senior secured term loan facility to agree to change its terms to permit repurchases of the preferred stock. Ocwen can now also repurchase up to $1.5 billion of common stock.
The amendment to the terms also eliminates the dollar cap on junior indebtedness among other things.
Bill Erbey, Ocwen’s executive chairman, said, “We believe that our cash generating capability and debt capacity are sufficient to fund substantial growth and return earnings to our shareholders in the form of stock repurchases.”