Former Walter Investment enters new credit agreement, notes indenture

By Caroline Salls

Pittsburgh, Feb. 12 – Ditech Holding Corp., formerly Walter Investment Management Corp., entered into a $1,156,500,000 second amended and restated credit agreement upon its exit from Chapter 11 bankruptcy and an indenture for $250 million in 9% second-lien senior subordinated PIK toggle notes due 2024, according to an 8-K filed with the Securities and Exchange Commission.

Ditech said the credit agreement provides for secured term loans maturing on June 30, 2022.

The term loans bear interest at a rate of, at the option of the company, Libor plus 600 basis points with a 1% Libor floor or an alternative Base rate plus 500 bps.

Mandatory repayment obligations under the credit agreement include 100% of the net sale proceeds from the sale or other disposition of non-core assets of the company and some of its subsidiaries, 80% of the net sale proceeds from non-ordinary course asset sales and dispositions of bulk mortgage servicing rights (MSR), 100% of the net cash proceeds from the issuance of specified debt and, beginning with the fiscal year ending Dec. 31, 2018, 50% of the company’s excess cash flow.

The credit agreement also requires that upon receipt by the company or some of its subsidiaries of the gross proceeds of any disposition of bulk MSR and related servicing advances before Feb. 15, Ditech must make a prepayment of the term loans in an amount equal to 80% of the gross proceeds.

The new $250 million 9% second-lien notes mature on Dec. 31, 2024 with Wilmington Savings Fund Society, FSB as trustee and collateral agent.

The company may redeem all or a portion of the new second-lien notes at any time before Dec. 15, 2020 by paying a make-whole premium plus accrued interest, if any, to the redemption date.

All or a portion of the new notes may be redeemed at any time on or after Dec. 15, 2020 at a price of 106 in 2020, 104 in 2021, 102 in 2022 and par thereafter, in each case including accrued interest to the redemption date.

In addition, on or before Dec. 15, 2020, Ditech may redeem up to 35% of the total principal amount of the notes with the net proceeds of equity offerings at the redemption price of 109 plus accrued and unpaid interest, if any, to the redemption date.

If the company experiences specific kinds of changes of control, it must offer to repurchase the notes at 101 plus accrued and unpaid interest, if any, to the repurchase date.

Walter, a Fort Washington, Pa., servicer and originator of mortgage loans and servicer of reverse mortgage loans, emerged from bankruptcy on Feb. 9.

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