PHH Corporation (NYSE: PHH) (“PHH” or the “Company”) announced June 2nd that it has entered into a definitive agreement to sell its Fleet Management Services business, doing business as PHH Arval, to Element Financial Corporation (“Element”) for approximately $1.40 billion in cash. Pursuant to the terms of the agreement, the transaction is structured as a stock-for-cash transaction, but will be treated as an asset sale for tax purposes under the U.S Internal Revenue Code. Upon closing and subject to certain post-closing purchase price adjustments, PHH expects to record an after-tax gain of approximately $250 million to $300 million, and net proceeds after taxes and transaction expenses are expected to be approximately $750 million to $800 million. Adjusted for the net proceeds expected to be received upon closing of this transaction and taking into account cash held in the Fleet Management Services subsidiaries to be acquired by Element, PHH’s pro forma consolidated cash and cash equivalents, as of March 31, 2014, would have been $1.67 billion to $1.72 billion. PHH expects to use the net proceeds to reengineer its operations and support infrastructure and make selective growth investments in its Mortgage business, return capital to shareholders, and reduce its unsecured debt levels. PHH will provide additional details regarding its capital allocation plans after the closing of the Fleet sale. Source: Filing
On February 15th, PHH had announced it was exploring the sale. We covered the story here.
