Ditech Holding Corp fka DHCPQ

[JC$]

News:

https://ih.advfn.com/stock-market/USOTC/ditech-holding-corporation-DHCP/stock-news/79117200/current-report-filing-8-k

As previously disclosed, in response to certain inquiries received by the Board of Directors (the “Board”) of Ditech Holding Corporation (the “Company,” “we,” “us” or “our”), during the second quarter of 2018 the Board initiated a process to evaluate strategic alternatives (the “Strategic Review”). This process is being conducted with the assistance of financial and legal advisors.

The Strategic Review is ongoing, and in connection therewith the Company has been considering a range of potential transactions including, among other things, a sale of the Company, a sale of all or a portion of the Company’s assets, and/or a recapitalization of the Company. During the fourth quarter of 2018, the Company entered into non-disclosure agreements with, and the Company and its financial and legal advisors began to have discussions with, certain of its corporate debt holders and their advisors regarding potential strategic transactions that may involve implementation through a prearranged chapter 11 plan of reorganization.

The Company is currently actively engaged in confidential, constructive discussions with an ad hoc group of lenders (the “Term Loan Lenders”) holding more than 60% of the aggregate total principal amount of the Company’s senior secured first lien term loan (the “Term Loan”), borrowed pursuant to the Second Amended and Restated Credit Agreement, dated as of February 9, 2018 (as amended, supplemented or otherwise modified). The Company and the Term Loan Lenders are currently discussing the terms of a restructuring support agreement for the Term Loan Lenders’ support for a prearranged chapter 11 plan of reorganization which, as currently contemplated, would be designed to (1) deleverage the Company by equitizing a significant percentage of the Term Loan, (2) enable the Company to implement its operational right-sizing and rationalization with the support of the Term Loan Lenders, and (3) provide the Company with debtor-in-possession financing and exit financing from third parties as part of the prearranged chapter 11 plan of reorganization. As part of the Strategic Review, the Company has also been engaged in discussions with an ad hoc group of holders of the Company’s outstanding 9.0% Second Lien Senior Subordinated PIK Toggle Notes due 2024, as well as other key stakeholders, counterparties and GSEs, and such discussions remain ongoing.

As previously disclosed, New Residential Mortgage LLC (“NRM”) and the Company are party to the Subservicing Agreement, dated as of August 8, 2016, by and between the Company and NRM (as amended, the “Subservicing Agreement”). On January 17, 2019, the Company received a notice (the “Notice”) from NRM initiating the process of termination under the Subservicing Agreement. Any termination of the Subservicing Agreement would not be effective until a servicing transfer has been completed in accordance with applicable requirements. The Company is reviewing the grounds for termination in consultation with its stakeholders and is considering all of its options with respect thereto including legal rights and remedies. The Company may continue discussions with NRM in connection with its recapitalization efforts; however, the Company, in consultation with the Term Loan Lenders, has determined to proceed with its recapitalization efforts assuming there is not an ongoing subservicing relationship with NRM. The Company and Term Loan Lenders’ recapitalization plans are not contingent on any continuing relationship with NRM.

Pursuant to the Subservicing Agreement, in the event that NRM does not withdraw the Notice or the Company does not reach an amicable settlement with NRM, we expect that it would take several months to complete such a transfer. The receipt of the Notice, in and of itself, is not an event of default or cross default under the Company’s debt documents or warehouse facilities and the Company is evaluating the impact, if any, of any fees payable in connection with the termination of the Subservicing Agreement.

Descriptions of the material terms and conditions of the Subservicing Agreement and the amendments and side letter thereto were previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, Current Report on Form 8-K filed with the Securities and Exchange Commission on January 23, 2018, and other filings with the Securities and Exchange Commission.

The Company cannot provide any assurance with respect to the results of the Strategic Review, the Company’s ongoing discussions with the Term Loan Lenders, with NRM or with any of its other key stakeholders, nor can there be any assurance as to the timing or terms of any plan of reorganization.