Jeff Tennyson is out as president of Radian Group's Clayton Holdings real estate services business as the holding company provided further details about its restructuring plan.
Philadelphia-based Radian committed to the restructuring on Sept. 5 but delayed disclosure until now "to allow for communications with affected employees," an 8-K filing said.
As part of the change, Tennyson's position was eliminated effective immediately.
Radian took a $130 million noncash charge in the second quarter as it announced in its Aug. 1 conference call it wanted to focus on businesses in the real estate services segment that had higher growth potential.
In May 2014, Radian purchased Shelton, Conn.-based Clayton Holdings for $305 million in what became a failed bet that the private-label mortgage-backed securitization market would come back; Clayton provided due diligence for MBS investors. It also offered servicing surveillance and foreclosed-property services. Radian was looking to expand its offerings as competition in the private mortgage insurance business heated up after the housing crisis.
The restructuring will add a $12 million charge to earnings ($5 million will be in cash) for the third quarter. An additional $8 million in charges — $7 million in cash — will be taken over the next 12 months.
The total charges of approximately $20 million are expected to consist of $8 million in asset impairments, $7 million in employee severance and benefit costs, $3 million in facility and lease termination costs, and $2 million in contract termination and other restructuring costs.
While Tennyson's job is already eliminated, he will remain with Radian Group until Nov. 11 "to assist with an orderly management transition for the services business," the 8-K said.
"We are committed to transforming Radian into an even more cohesive and profitable company. Our actions demonstrate strategies that are designed to establish a solid foundation for broader reach and growth," Radian CEO Rick Thornberry said in a press release. "As we look to the future, we expect our restructuring plan to reposition our services business for profitability and make our entire company stronger."
Radian has also entered into a $225 million three-year unsecured credit facility with a consortium of banks led by Royal Bank of Canada and U.S. Bank. Borrowings can be used for working capital and general corporate purposes, including making capital contributions to Radian's insurance and reinsurance subsidiaries.