Ocwen launches $2.2 billion of term loans at Libor plus 325 bps

By Sara Rosenberg

New York, Jan. 28 - Ocwen Financial Corp. launched on Tuesday its $2.2 billion of term loans with price talk of Libor plus 325 basis points with a 1% Libor floor and an original issue discount of 991/2, according to a market source.

The all-in yield is 4 3/8%, the source said.

The debt includes a $1.5 billion seven-year term loan and a $700 million seven-year final maturity delayed-draw term loan.

The term loans have 101 soft call protection for six months and amortization of 1% per annum, the company disclosed in an 8-K filed with the Securities and Exchange Commission.

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

Mandatory prepayments are 100% of the net proceeds from non-permitted debt, 100% of net asset sale proceeds with carve-outs and reinvestment rights, and 50% excess cash flow with leverage-based step-downs.

Commitments are due on Feb. 4.

Wells Fargo Securities LLC, Barclays, J.P. Morgan Securities LLC and Bank of America Merrill Lynch are the joint lead arrangers and bookrunners on the deal, with Barclays the administrative agent.

Proceeds will be used to refinance an existing $1.3 billion senior secured term loan and fund the acquisition of residential mortgage servicing rights on a portfolio consisting of around 184,000 loans with a total principal balance of $39 billion from Wells Fargo Bank.

Closing on the term loans is expected on Feb. 12, with the delayed-draw tranche anticipated to fund on March 21.

Ocwen is an Atlanta-based financial services holding company that is engaged in the servicing and origination of mortgage loans.

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