Walter Industries announces planned spinoff, merger of financing business

By Lisa Kerner

Charlotte, N.C., Sept. 30 - Walter Industries, Inc. said it plans to separate its financing business from the company's core natural resources businesses.

According to Walter Industries, it would distribute 100% of its interest in JWH Holding Co., LLC to its shareholders.

JWH Holding is a Walter Industries subsidiary and the parent company of Walter Mortgage Co. and Jim Walter Homes.

Jim Walter Homes will be sold or otherwise separated from JWH Holding and will not be part of the spun-off entity, according to a company news release. All future financing for Jim Walter Homes' customers will be provided by third-party lenders.

Immediately after the spinoff, JWH Holding will merge with Hanover Capital Mortgage Holdings, Inc., a New Jersey-based real estate investment trust. The combined company will operate as a publicly traded REIT under the name Walter Investment Management Corp. and will be based in Tampa, Fla.

Mark J. O'Brien, chairman and chief executive officer of JWH Holding, will become chairman and CEO of Walter Investment Management.

Current Walter Mortgage president Charles E. Cauthen will become president and chief operating officer of the newly combined company.

Walter Industries said its board of directors will designate six directors, including Walter Industries chairman Michael T. Tokarz and O'Brien, to Walter Investment Management's board. Hanover will designate one director to the board.

"The spinoff of the financing business will preserve the significant value of its portfolio for our shareholders and will allow for the efficient distribution of its earnings through dividends following the merger of JWH Holding Co. and Hanover," Tokarz said in the release.

Moelis & Co. is advising Walter Industries, and Keefe, Bruyette & Woods, Inc. is advising Hanover.

Walter Industries, based in Tampa, produces and exports metallurgical coal for the global steel industry; produces steam coal, coal bed methane gas, furnace and foundry coke and other related products; and operates a mortgage financing and affordable homebuilding business.

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