Pennant Capital Management LLC, a Chatham, N.J.-based hedge fund with a stake in PHH Corp., has reiterated its opposition to PHH's agreement to sell out to GE Capital and The Blackstone Group.Citing information provided by PHH in an Aug. 6 preliminary proxy, Pennant again called on management to separate the company's two main businesses with a spinoff of its fleet management operations. "The new disclosures underscore the value-destroying nature of the proposed sale and strongly support our rationale for continued public ownership and a business separation through a tax-free spin-off," Pennant said in its letter, signed by managing member Alan Fournier. Mr. Fournier said the amended proxy "shows that the board likely agreed to sell the mortgage business for after-tax proceeds of less than 0.8x tangible book, implying that even a liquidation of the mortgage business would be preferable to the proposed sale and result in an immediate combined valuation of $35 per share." Pennant estimated that this would allow shareholders to realize a combined valuation of approximately $60 per share in two years. PHH is one of the largest independent mortgage banks in the country.
