PHH calls off its sale to Blackstone

PHH Corp, the New Jersey-based mortgage and vehicle leasing company, scrapped its $1.8 billion sale to General Electric Co and Blackstone Group LP because Blackstone failed to get financing for the transaction.

GE agreed on March 15 to buy PHH, sell the mortgage division to New York-based Blackstone and keep the vehicle-leasing unit. The acquisition price was $31.50 a share.

PHH said on September 17 that JPMorgan Chase & Co and Lehman Brothers Holdings Inc told Blackstone they may fall $750 million short in funding the private equity firm's part of the deal.

The deal collapsed as banks struggle to unload debt from 2007's record $438 billion of leveraged buyouts.

Losses from securities tied to subprime mortgages cut demand for higher-yielding assets. JPMorgan, Citigroup Inc, Goldman Sachs Group Inc and Morgan Stanley have offered discounts of up to 10 cents on the dollar to clear a backlog of high-yield bonds and loans.

PHH shares fell 0.8 percent to $17.64 in New York Stock Exchange composite trading on Monday, giving the company a market value of $953 million. The stock closed at $27.81 on March 14, the day before the acquisition was announced.

PHH, based in the Philadelphia suburb of Mount Laurel, New Jersey, has provided mortgages and related services such as billing for other financial companies to offer under their own brands, including American Express Co and Charles Schwab Corp.

Agencies

(China Daily 01/02/2008 page17)