Minnesota-based Green Tree is an independent, fee-based business services company which provides third-party servicing of credit-sensitive consumer loans.
This acquisition is expected to transform Walter Investment into a major business services company focused on recurring, fee-based revenues generated from an ‘asset-light’ platform.
Walter Investment said that it will issue nearly 1.8 million shares of common stock to the seller, assume approximately $20m of existing Green Tree debt, and issue $765m of new debt which has been fully committed by Credit Suisse and The Royal Bank of Scotland and which, together with cash, will be used to acquire the equity of Green Tree, repay existing Green Tree indebtedness and pay fees and expenses of the transaction.
As a result of this transaction, Walter Investment will no longer qualify as a REIT, Walter Investment added.
Walter Investment chairman and CEO Mark O’Brien said that the ability to generate revenues from recurring, fee-based sources, with high operating margins from an asset-light platform is an especially attractive addition to the existing business model.
Green Tree CEO Keith Anderson said the Green Tree team has built a solid reputation as a best-in-class business services company. Now, by combining with Walter Investment, Green Tree will be able to operate within a larger and stronger capital base, enhancing the ability to execute strategic objectives and meet the long-term financial goals.
The transaction is subject to receipt of approvals, third-party consents and the satisfaction of other customary closing conditions and is expected to complete in the third quarter of 2011.
