Ocwen Financial launches $575 million term loan at Libor plus 575 bps

By Sara Rosenberg

New York, July 19 - Ocwen Financial Corp. launched its $575 million five-year senior secured term loan (B1/B) on Tuesday with price talk of Libor plus 575 basis points with a 1.5% Libor floor and an original issue discount of 98, according to a market source.

The term loan includes 101 soft call protection for one year, the source said.

Amortization is 10% per annum.

Financial covenants include a maximum corporate debt to EBITDA ratio, a maximum total consolidated debt to tangible net worth ratio, a minimum interest coverage ratio and a maximum loan to value ratio.

Barclays Capital Inc. is the lead bank on the deal.

Commitments are due on Aug. 5.

Proceeds will be used to help fund the acquisition of Litton Loan Servicing LP, a provider of servicing and subservicing of primarily non-prime residential mortgage loans, from Goldman Sachs Group Inc. for a base purchase price of $263.7 million in cash.

In addition, subject to adjustments based on outstanding servicer advances at closing, Ocwen will pay $337.4 million to retire a portion of the outstanding debt on an existing advance facility at Litton that was provided by Goldman.

The transaction will result in the acquisition by Ocwen of a servicing portfolio of $41.2 billion in unpaid principal balance of primarily non-prime residential mortgage loans as of March 31, and the servicing platform of the business based in Houston and Dallas.

Closing is expected on Sept. 1, subject to the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other conditions.

Pro forma for the transaction, corporate debt to run rate adjusted EBITDA is 1.7 times and total debt to total equity is 4.5 times.

Ocwen is an Atlanta-based provider of residential and commercial loan servicing, special servicing and asset management services.

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