Item 1.01. Entry into a Material Definitive Agreement.
On June 29, 2011, Chesapeake Funding LLC (“Chesapeake”), an indirect wholly-owned subsidiary of PHH
Corporation (“PHH,” the “Company,” “we” or “our”), amended and restated its Series 2010-1 Indenture
Supplement (the “A&R Series 2010-1 Supplement”), among Chesapeake, as issuer, PHH Vehicle
Management Services, LLC (“PHH VMS”), a wholly-owned subsidiary of the Company, as administrator,
JPMorgan Chase Bank N.A. (“JPMorgan”), as administrative agent, certain non-conduit purchasers,
certain CP conduit purchaser groups, funding agents for the CP conduit purchaser groups and certain
Class B Note Purchasers as set forth therein and The Bank of New York Mellon (“BNY”), as indenture
trustee, to the Amended and Restated Base Indenture, dated as of December 17, 2008 (as amended as
of May 28, 2009, the “A&R Base Indenture”), between Chesapeake, as issuer, and BNY, as indenture
trustee.
On June 29, 2011, Chesapeake also entered into a Series 2011-1 Indenture Supplement (the “Series
2011-1 Supplement”), among Chesapeake, as issuer, PHH VMS, as administrator, JPMorgan, as
administrative agent, certain non-conduit purchasers, certain CP conduit purchaser groups, funding
agents for the CP conduit purchaser groups and certain Class B Note Purchasers as set forth therein
and BNY, as indenture trustee, to the A&R Base Indenture.
As a result of entering into the A&R Series 2010-1 Supplement and the Series 2011-1 Supplement, the maturity of the
Series 2010-1 Notes was extended, the total committed funding available to Chesapeake was increased
and the tenor of Chesapeake’s liability structure was extended.
Pursuant to the A&R Series 2010-1 Supplement, Chesapeake: (i) may issue from time to time up to
$700 million in aggregate principal amount of its Series 2010-1 Floating Rate Asset Backed Variable
Funding Investor Notes, Class A (“Series 2010-1 Class A Notes”); and (ii) had $23,076,923 in
aggregate principal amount of its Series 2010-1 Floating Rate Asset Backed Investor Notes, Class B
(the “Series 2010-1 Class B Notes” and, together with the Series 2010-1 Class A Notes, the “Series
2010-1 Notes”) issued and outstanding as of June 29, 2011.
Pursuant to the Series 2011-1 Supplement, Chesapeake: (i) may issue from time to time up to $500 million
in aggregate principal amount of its Series 2011-1 Floating Rate Asset Backed Variable Funding
Investor Notes, Class A (“Series 2011-1 Class A Notes”); and (ii) had $16,483,516 in aggregate
principal amount of its Series 2011-1 Floating Rate Asset Backed Investor Notes, Class B (the
“Series 2011-1 Class B Notes” and, together with the Series 2011-1 Class A Notes, the “Series
2011-1 Notes”) issued and outstanding as of June 29, 2011.
Prior to
giving effect to the A&R Series 2010-1 Supplement, outstanding balances of the Series
2010-1 Class A Notes and Series 2010-1 Class B Notes were $982 million and $32,967,033,
respectively. On June 29, 2011, Chesapeake (i) issued $409,166,667 of Series 2011-1 Class A
Notes, the proceeds of which were used to paydown the outstanding balance under the Series 2010-1
Class A Notes to $572, 833,333, and (ii) issued $16,483,516 of Series 2011-1 Class B Notes,
a portion of the proceeds of which were used to paydown the outstanding balance under the
Series 2010-1 Class B Notes from $32,967,033 to $23,076,923.
As of June 29, 2011, undrawn capacity under the Series 2010-1 Class A Notes and
Series 2011-1 Class A Notes of $127,166,667 and $90,833,333, respectively, remains available to provide funding for our domestic
vehicle financing needs. The revolving period for the Series 2010-1 Notes and the Series 2011-1
Notes expires on June 27, 2012, and June 27, 2013, respectively, subject to extension pursuant to
the terms of the A&R Series 2010-1 Supplement and the Series 2011-1 Supplement, respectively.
Unless otherwise extended, upon expiry, the Series 2010-1 Notes and the Series 2011-1 Notes will amortize in accordance with their respective terms and noteholders will
be repaid as lease payments are received over the lease term of the vehicle leases and related assets that collateralize such notes.
The Series 2010-1 Notes and the Series 2011-1 Notes bear interest at variable rates payable
monthly. The A&R Series 2010-1 Supplement and the Series 2011-1 Supplement each incorporate by
reference from the A&R Base Indenture certain customary covenants that limit Chesapeake’s ability,
among other things, to incur additional indebtedness, pay dividends on or redeem or repurchase its
own equity interests, make certain investments, expand into unrelated businesses and create liens.
Chesapeake has the option to redeem in full the Series 2010-1 Notes and the Series 2011-1 Notes
upon notice at a redemption price equal to the aggregate outstanding principal balance plus accrued
and unpaid interest on such balance.