Ocwen launches $1.3 billion secured term loan at Libor plus 425 bps

By Sara Rosenberg

New York, Jan. 17 - Ocwen Loan Servicing LLC launched with a bank meeting on Thursday its $1.3 billion five-year senior secured term loan with talk of Libor plus 425 basis points with a 1.25% Libor floor and an original issue discount of 99 to 991/2, according to an 8-K filed with the Securities and Exchange Commission.

The loan has 101 soft call protection for one year.

Amortization is 1% per annum.

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

Commitments are due on Jan. 28, with closing targeted for Jan. 31, the filing said.

Barclays, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC are the joint lead arrangers and bookrunners on the deal.

Proceeds will be used to fund the acquisition of some mortgage servicing assets from Residential Capital LLC and to refinance existing term loan debt.

Ocwen is buying Residential Capital's mortgage servicing and origination businesses with Walter Investment Management Corp. for about $3 billion.

Walter Investment, a Tampa, Fla.-based asset manager, mortgage servicer and mortgage portfolio owner, will be getting the Fannie Mae mortgage servicing rights portion of Residential Capital's servicing portfolio, as well as the origination and capital markets platform.

Closing is expected on Jan. 31, subject to customary conditions, including the approval of Freddie Mac, Fannie Mae and various government agencies.

Pro forma corporate debt to trailing 12-month adjusted EBITDA is 1.7 times, and total debt to total net worth is 3.6 times.

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

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