PHH Corp.'s results clear hurdles to acquisition by Ocwen Financial
PHH Corp. took a net loss in the first quarter but was able to surpass minimums for net worth and available cash necessary for Ocwen Financial to acquire the company.
PHH's $30 million net loss for the period ending March 31 marked an improvement on its net loss of $67 million during the first quarter of last year, and an improvement on its net loss of $49 million in the fourth quarter of 2017.
"Based on the progress made to date on certain closing conditions, including the levels of adjusted net worth and available cash on hand levels as compared to the threshold levels agreed up in the merger agreement, we continue to believe that the transaction could close in the third or fourth quarter 2018," said PHH President and CEO Robert Crowl in a press release.
PHH's stockholders' equity was $523 million at the end of the first quarter. Ocwen can terminate the merger agreement if PHH's adjusted net worth falls more than $47.5 million below certain benchmarks. The benchmark was $489 million, making $441.5 million the minimum required on March 31.
PHH's total for cash and cash equivalents was $480 million on March 31, above the threshold of $367 million for available cash on hand as of that date.
Adjustments made to derive PHH's net worth from its stockholder equity and to drive available cash on hand from the total for cash and cash equivalent were "immaterial," according to the company's press release.
Among other hurdles the proposed acquisition faces is a vote by PHH shareholders next month. The merger does not require a vote by Ocwen shareholders.