Ocwen cuts pricing on $1.3 billion term loan to Libor plus 375 bps

By Sara Rosenberg

New York, Jan. 24 - Ocwen Loan Servicing LLC reduced the spread on its $1.3 billion five-year senior secured term loan to Libor plus 375 basis points from Libor plus 425 bps, according to a market source.

Also, the original issue discount was set at 991/2, the tight end of the 99 to 99½ talk, the source said.

The 1.25% Libor floor and 101 soft call protection for one year were left unchanged.

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.

Recommitments are due at noon ET on Friday, the source added. This was revised from the original commitment deadline of Jan. 28.

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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