PMI Seeks Fairbanks-Linked Amendment

The PMI Group Inc., Walnut Creek, Calif., has announced a consent solicitation regarding certain debentures that would exclude the beleaguered Fairbanks Capital Holding Corp. as a "designated subsidiary" of PMI.The company is seeking consents to a proposal to change the definition of a designated subsidiary in the indenture for its 2.50% senior convertible debentures due 2021 by excluding Fairbanks Capital Holding, its subsidiaries, and any of their successors. It would also increase from 15% to 25% the percentage of consolidated assets a subsidiary would have to represent in order to constitute a designated subsidiary. "As a result of the proposed amendment, any failure to pay indebtedness at maturity or default with respect to indebtedness for borrowed money by Fairbanks or any of its subsidiaries would not constitute events of default under the indenture," PMI said. Standard & Poor's recently revised its rating outlook for PMI from stable to negative after S&P lowered the residential subprime and special servicer rankings of the Salt Lake City-based Fairbanks Capital Corp., a subsidiary of Fairbanks Capital Holding. PMI owns 57% of the servicer, which has been the target of lawsuits regarding its servicing practices and of reviews by the Department of Housing and Urban Development and the Federal Trade Commission.