Item 1.01.
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Entry into a Material Definitive Agreement.
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As previously disclosed, Walter Investment Management Corp.
(WIMC) has entered into (i) an Amended and Restated Restructuring Support Agreement (as amended, the Term Lender RSA) with lenders holding, as of October 20, 2017, more than 48% of the loans and/or commitments
outstanding under the Credit Agreement, and (ii) a Restructuring Support Agreement (together with the Term Lender RSA, the RSAs) with senior unsecured noteholders holding, as of October 20, 2017, more than 50% of the Senior
Notes. Pursuant to the RSAs, WIMC has agreed to a restructuring of its capital structure that is contemplated to be implemented through a chapter 11 proceeding consistent with the terms and subject to the conditions set forth in the RSAs (the
Restructuring). Capitalized terms that are used but not otherwise defined herein have the meaning ascribed to them in the relevant agreement.
Credit Suisse Amendment
On October 18, 2017, Ditech
Financial LLC (Ditech), a wholly-owned, indirect subsidiary of WIMC, and WIMC entered into Amendment No. 3 (the
CS-Ditech
Amendment) to the Amended and Restated Master Repurchase
Agreement, dated as of November 18, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the Ditech Repurchase Agreement) among Credit Suisse First Boston Mortgage Capital LLC (the Administrative
Agent), Credit Suisse AG, acting through its Cayman Islands Branch, as committed buyer and buyer, Alpine Securitization Ltd, as buyer, Ditech, as seller and WIMC, as guarantor, and a related side letter amendment (together with the Ditech
Repurchase Agreement, the
CS-Ditech
Facility), pursuant to which, among other things, the committed portion of the
CS-Ditech
Facility was increased from
$250 million to $400 million, with the total capacity remaining at $500 million.
The
CS-Ditech
Facility was also amended to provide for the following additional events of default: (i) an event of default under the RMS Repurchase Agreement; and (ii) failure to execute a margin, netting, and
set-off
agreement among Credit Suisse Securities (USA) LLC and the Administrative Agent (collectively, CS) (and with respect to CS, any Person who, directly or indirectly is in control of, or is
controlled by, or is under common control with CS), Ditech, Reverse Mortgage Solutions, Inc., a wholly-owned, indirect subsidiary of WIMC (RMS), and RMS REO BRC, LLC, a wholly-owned subsidiary of RMS (together with RMS, the RMS
Parties), and acknowledged by WIMC (the Netting Agreement), in form and substance reasonably acceptable to the Administrative Agent, on or prior to December 1, 2017. The Netting Agreement is contemplated to provide for CS to
have certain margin, netting and/or
set-off
rights with respect to property and/or funds held, pledged or otherwise owned or owing to CS in connection with obligations of Ditech and the RMS Parties under
various existing or future lending, repurchase or derivative agreements entered into between or among any of CS, Ditech and/or the RMS Parties. The effect of such an arrangement may provide for, among other things, cross-collateralization between
assets of Ditech and the RMS Parties.
Additionally, the Termination Date of the
CS-Ditech
Facility was extended
from November 17, 2017 to December 29, 2017, upon satisfaction of the following conditions (the Extension Conditions): (i) no Event of Default has occurred and is continuing; and (ii) receipt by the Administrative Agent of
(x) copies of duly executed and delivered RSAs, which shall not contain any material inconsistencies with the drafts provided by WIMC to the Administrative Agent on or prior to the date of the
CS-Ditech
Facility and (y) an amendment to the RMS Repurchase Agreement amending the events of default thereunder to include a cross-default provision relating to the Ditech Repurchase Agreement, substantially similar to the cross-default provision in
the
CS-Ditech
Amendment. There is no guarantee that such Extension Conditions shall occur.
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In addition, covenants requiring the CS-Ditech Facility to account for no more than a third of Ditechs
total committed financing capacity and requiring that Ditech maintain other master repurchase agreements with other counterparties in an amount equal to at least $500 million have been removed in the amended
CS-Ditech
Facility. In consideration for the amendment to the
CS-Ditech
Facility, Ditech has agreed to pay a fee to the Administrative Agent, which fee will be fully
applied against any future arrangement fees, structuring fees, commitment fees, underwriting fees, upfront fees and/or similar fees paid or payable to the Administrative Agent or any of its Affiliates (on or prior to December 29, 2017) pursuant
to any upsizing, refinancing or replacement of one or more warehouse facilities or other advance line of credit facilities of WIMC or any of its subsidiaries in connection with or in contemplation of the Restructuring. Furthermore, certain other
economic terms were also amended pursuant to the
CS-Ditech
Facility Amendment.
WIMC has experienced reductions in
availability under certain of its warehouse and advance facilities, through reductions in advance rates, changes to the terms of such facilities and otherwise, which has negatively impacted WIMCs available liquidity and capital resources. The
increase in funding available under the CS-Ditech Facility is expected to better position WIMC to ensure it has sufficient liquidity in the near-term, though no assurance can be given that WIMC will be successful in maintaining adequate financing
capacity with its current or prospective lenders.
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