Ocwen Financial Corp. agreed to settle a shareholder lawsuit for a cash payment of $49 million, plus 2.5 million shares of the company's stock.
Based on Ocwen's closing price of $2.78 per share on July 19, the stock was valued at $6.95 million. The agreement said Ocwen can add additional shares to bring the total value to $7 million.
In lieu of issuing the stock, Ocwen can decide to pay the plaintiffs an additional $7 million in cash.
The settlement was disclosed in a Securities and Exchange Commission filing.
The net pretax impact of the settlement on Ocwen's second-quarter results would be between $34 million and $36 million, the filing said. It affects the second-quarter results because that is when the reserves for a potential settlement were taken.
Some shareholders filed this lawsuit against the West Palm Beach, Fla.-based company in the United States District Court for the Southern District of Florida after Ocwen restated its 2013 and first-quarter 2014 results and entered into a consent order with the New York Department of Financial Services in December 2014.
"While the company believes that it has sound legal and factual defenses, Ocwen agreed to this settlement in order to avoid the uncertain outcome of trial and the additional expense and demands on the time of its senior management that a trial would involve," the SEC filing added.
The settlement still needs to be approved by the court before it becomes final. The SEC filing did not provide a hearing date.