PHH sets exchange ratio in offer to exchange 6% convertibles due 2017

By Toni Weeks

San Luis Obispo, Calif., June 15 – PHH Corp. disclosed the final exchange ratio in connection with its offer to exchange its $245 million of outstanding 6% convertible senior notes due 2017, according to a press release.

For each $1,000 principal amount of notes tendered for exchange, holders will receive 41.4611 common shares.

This amount is equal to the sum of the daily settlement amounts for each trading day during the 25 trading days ending on June 15. The daily settlement amount is equal to the quotient of (a) 1/25 multiplied by (b) (i) 78.2014 shares of PHH common stock multiplied by the weighted average trading price of PHH common stock on that trading day minus (ii) 1,000 divided by (c) that weighted average trading price of PHH common stock.

According to the release, the mandatory extension of the offer did not apply, as the exchange ratio is lower than 42.4871, the maximum number of shares that may be issued per $1,000 principal amount.

The offer will expire at 11:59 p.m. ET on June 15, with settlement slated for June 18.

Holders will also receive accrued interest from June 15 up to but excluding the settlement date.

The offer is not contingent on the receipt of any minimum amount of notes.

Tendered notes accepted by PHH for exchange will be retired and canceled.

The company said in a previous press release that it is holding the offer because, among other reasons, the premium at which the notes have traded above par has declined materially and because the notes represent PHH’s unsecured debt with the highest effective interest rate. PHH also believes the offer can mitigate dilution that could result from the conversion of the tendered notes.

Following the offer, the company plans to begin a $250 million open-market share repurchase program as soon as it is legally permitted to do so, with the goal of completing the repurchases by March 31, 2016.

Citigroup is acting as PHH’s financial adviser in connection with the offer.

The information agent is Global Bondholder Services Corp. (212 430-3774).

Based in Mount Laurel, N.J., PHH provides end-to-end mortgage solutions through its subsidiary, PHH Mortgage.

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