Actionable Opportunities in Special Situations: Spinoffs, Bankruptcy, Restructurings


Springleaf Holdings (LEAF) Announces Closings on Sales of Real Estate Loans and Securitization Interests

Springleaf Holdings, Inc. (NYSE:LEAF) announced today another significant step toward completing the company’s previously disclosed mortgage liquidation plan.

At December 31, 2013, the company’s real estate portfolio totaled approximately $9 billion1 on a historical accounting basis. By June 30, 2014, the company had closed on the sale of approximately $1.5 billion of real estate loans backed by securitization interests, and today the company is reporting that it completed the sale of certain performing and non-performing mortgage loans (“whole loans”) of $1 billion to Credit Suisse Securities (USA) LLC (“Credit Suisse”). The sale was completed pursuant to the company’s previously announced agreement to sell to Credit Suisse whole loans of approximately $1.7 billion. Credit Suisse continues to perform diligence on the remaining whole loans and additional sales may be completed during the fourth quarter of 2014, though there can be no assurances as to what portion of the remaining whole loans will be sold or the timing of such sales. As of September 30, 2014, the company has closed on the sale of an additional $6 billion in real estate loans and securitization interests since June 30, 2014 (including sales that closed on August 29, 2014, as previously announced), leaving less than $1.5 billion of real estate loans in the company’s portfolio.

Through a strategy of further sales to Credit Suisse or other parties and natural portfolio runoff, the company’s goal is to achieve the target of holding approximately $1 billion or less in real estate loans by December 31, 2014.

The company also announced today the substantial completion of the wind down of its real estate servicing operation, which follows the sale of the company’s mortgage servicing rights for certain securitized loans to a subsidiary of Nationstar Mortgage Holdings Inc. (NYSE:NSM) on August 29, 2014. As of October 1, 2014, substantially all of the company’s remaining first lien real estate portfolio is being serviced by Nationstar and a third party servicer pursuant to separate subservicing agreements with the company.

Separately, Springleaf announced today that on Friday, October 3, 2014, the company and its co-investors closed on a $2.6 billion asset-backed secured refinancing of a consumer loan portfolio with an unpaid principal balance of approximately $2.74 billion (referred to as the “SpringCastle” portfolio) in which it acquired an interest in April, 2013, and for which it assumed servicing later that year. The refinancing will generate incremental proceeds of approximately $1.13 billion for the SpringCastle co-investors, with the company’s share totaling approximately $530 million. The company anticipates that it will invest approximately $360 million of such proceeds in certain securities offered in connection with the refinancing.

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