PHH 8k
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date
of Report (Date of earliest event reported): March 31,
2006
PHH
CORPORATION
(Exact
name of registrant as specified in its charter)
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MARYLAND
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1-7797
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52-0551284
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(State
or other jurisdiction
of
incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
No.)
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3000
Leadenhall Road
Mt.
Laurel, New Jersey 08054
(Address
of principal executive offices, including zip code)
(856)
917-1744
(Registrant’s
telephone number, including area code)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
[
] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[
] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[
] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[
] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item
1.01 Entry
into Material Definitive Agreement.
(a)
New
Credit Agreement
On
April
6, 2006, PHH Corporation (the “Company”), as borrower, entered into a
$500,000,000 unsecured 364-Day Revolving Credit Agreement (“Credit Agreement”)
with J.P. Morgan Securities Inc. and Citigroup Global Markets Inc., as Joint
Lead Arrangers and Joint Bookrunners, the lenders referred to therein (the
“Lenders”), and JPMorgan Chase Bank, N.A., as a Lender and Administrative Agent
for the Lenders.
The
proceeds of the borrowings under the Credit Agreement will be used for working
capital and general corporate purposes. The
Credit Agreement includes terms and conditions, which are generally consistent
with those in the Amended and Restated Competitive Advance and Revolving Credit
Agreement (the “Existing Credit Agreement”), dated as of January 6, 2006, among
the Company and
PHH
Vehicle Management Services Inc., a wholly-owned Canadian subsidiary of the
Company, as borrowers; J.P. Morgan Securities, Inc. and Citigroup Global
Markets, Inc., as joint lead arrangers; the lenders referred to in the Amended
Credit Agreement; and JPMorgan Chase Bank, N.A., as a lender and administrative
agent for the lenders. The terms and conditions in the Credit Agreement also
include provisions consistent with the waiver provisions received from the
lenders under the Existing Credit Agreement and disclosed in the Company’s
Current Report on Form 8-K filed on March 17, 2006
Interest
rates under the Credit Agreement are based upon the Company’s senior unsecured
long-term debt ratings. If the ratings on the Company’s senior unsecured
long-term debt assigned by Moody’s Investors Service, Standard & Poor’s and
Fitch Ratings are not equivalent to each other, the second highest credit rating
assigned by them determines pricing under the Credit Agreement. Borrowings
under
the Credit Agreement currently bear interest at LIBOR plus a margin of 38 basis
points (“bps”). The Credit Agreement also requires the Company to pay a per
annum facility fee of 12 bps and a per annum utilization fee of 10 bps if usage
exceeds 50% of the aggregate commitments under the Credit Agreement. In the
event that the Company’s second highest credit rating is downgraded, the margin
over LIBOR would become 47.5 bps for the first downgrade and up to 70 bps for
subsequent downgrades. The per annum facility fee would become 15 bps for the
first downgrade and up to 17.5 bps for subsequent downgrades. The Company will
also pay an additional facility fee of 10 bps on October 6, 2006 based upon
the
outstanding commitments under the Credit Agreement at that time. The facility
matures on April 5, 2007.
The
Credit Agreement (i) contains restrictive covenants, including, but not limited
to, restrictions on indebtedness of material subsidiaries, mergers, limitations
on liens, liquidations, sale and leaseback transactions, and (ii) requires
that
the Company maintain: (a) on the last day of each fiscal quarter, net worth
of
$1.0 billion plus 25% of net income, if positive, for each fiscal quarter ended
after December 31, 2004 and (b) at any time, a ratio of indebtedness to
tangible net worth no greater than 10:1.
There
were no borrowings under the Credit Agreement or the Existing Credit Agreement
as of April 6, 2006.
The
foregoing description of the Credit Agreement does not purport to be complete
and is qualified in its entirety by reference to the Credit Agreement, a copy
of
which is filed as Exhibit 10.1 to this Current Report on Form 8-K (the “Form
8-K”) and is incorporated herein by reference.
(b)
Amendment
to Operating Agreement of PHH Home Loans, LLC
On
March
31, 2006, PHH Broker Partner Corporation (the “PHH Member”), a wholly-owned
subsidiary of the Company, and Cendant Real Estate Services Venture Partner,
Inc. (the “Cendant Member”), a subsidiary of Cendant Corporation, entered into
Amendment No. 2 (the “Amendment”) to the Amended and Restated Limited Liability
Company Operating Agreement of PHH Home Loans, LLC (“PHH Home Loans”), dated as
of January 31, 2005 (the “Operating Agreement”), as amended on May 12,
2005.
Under
the
terms of the Operating Agreement, at any time after the tenth anniversary of
closing, the Cendant Member may deliver a two-year termination notice requesting
that the PHH Member either (i) purchase or cause to be purchased (the “Two Year
Put”) all of the Cendant Member’s interests in PHH Home Loans or (ii) sell all
of the PHH Member’s interests (the “Two Year Sale”) to a person not affiliated
with Cendant Corporation. The Amendment modifies the method for determining
the fair value applicable to the Two Year Put and the Two Year Sale,
providing for a valuation process to take place following delivery of a two-year
termination notice, instead of a fixed formula for making such
valuation.
The
foregoing descriptions of the Amendment and the Operating Agreement do not
purport to be complete and are qualified in their entirety by reference to
(i)
the Amendment, a copy of which was filed as Exhibit 10.1 to Cendant
Corporation’s Current Report on Form 8-K filed on April 3, 2006, (ii) Amendment
No. 1 to the Operating Agreement, which was filed as Exhibit 3.3.1 to the
Company’s Quarterly Report on Form 10-Q filed on August 12, 2005, and (iii) the
Operating Agreement, which was filed as Exhibit 10.1 to the Company’s Current
Report on Form 8-K filed on February 1, 2005, each of which is incorporated
herein by reference.
(c)
Management
Services Agreement
On
March
31, 2006, PHH Mortgage Corporation (“PMC”), the Company’s wholly-owned
subsidiary, entered into a management services agreement (the “Management
Agreement”) with PHH Home Loans, pursuant to which PMC provides certain mortgage
origination processing and administrative services for PHH Home Loans. As
previously disclosed, PHH Home Loans is a mortgage venture the Company formed
with a subsidiary of Cendant Corporation. Pursuant to the Management Agreement,
PMC provides PHH Home Loans assistance with seasonal call center staffing,
secondary mortgage marketing, pricing and, for certain channels, underwriting,
credit scoring and document review. PMC also provides administrative services,
including payroll, financial systems management, treasury, information
technology services, telecommunications services and human resources and
employee benefits services,
and is
paid for these services based upon various metrics depending on the category
of
services provided.
The
Management Agreement terminates automatically upon the termination of the
Company’s Strategic Relationship Agreement, a copy of which was previously filed
with the Securities and Exchange Commission by the Company.
The
foregoing description of the Management Agreement does not purport to be
complete and is qualified in its entirety by reference to the Management
Agreement, a copy of which is filed as Exhibit 10.3 to this Form 8-K and is
incorporated herein by reference.
Item
2.03 Creation
of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant.
The
information provided in response to Item 1.01(a), Entry into Material Definitive
Agreement, above is incorporated by reference in response to this
Item.
Item
8.01 Other
Events.
The
Company has concluded that it
will
be unable to satisfy the requirements of Section 203.01 of the NYSE
Listed Company Manual to distribute its annual report containing the
Company’s financial statements for the year ended December 31, 2005 to its
stockholders within 120 days of the 2005 fiscal year end. As announced
previously, because the Company’s 2005 financial statements have not been
finalized and the audit with respect to such financial statements is ongoing,
the Company has delayed the filing of its Annual Report on Form 10-K for the
fiscal year ended December 31, 2005 (the “Form 10-K”) beyond its filing
deadline. The Company is diligently working to complete its Form 10-K, and
will
distribute its annual report to its stockholders as soon as possible. However,
the Company can provide no assurances at this time as to when this distribution
will take place.
The
Company’s Annual Meeting of Stockholders was originally scheduled to be held on
April 27, 2006. Because the Company’s 2005 financial statements have not been
finalized, the Company has postponed its currently scheduled Annual Meeting
of
Stockholders. The Company expects to hold its Annual Meeting of Stockholders
as
soon as practicable following the filing of its Form 10-K.
Item
9.01 Financial
Statements and Exhibits.
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(c)
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Exhibits
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10.1
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364-Day
Revolving Credit Agreement, dated as of April 6, 2006, between PHH
Corporation, as Borrower, J.P. Morgan Securities Inc. and Citigroup
Global
Markets Inc., as Joint Lead Arrangers and Joint Bookrunners, the
lenders
referred to therein, and JPMorgan Chase Bank, N.A., as a Lender and
Administrative Agent for the Lenders.
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10.2
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Amendment
No. 2, dated as of March 31, 2006, to the Amended and Restated Limited
Liability Company Operating Agreement of PHH Home Loans, LLC, dated
as of
January 31, 2005, as amended.*
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10.3
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Management
Services Agreement, dated March 31, 2006, between PHH Home Loans,
LLC and
PHH Mortgage Corporation.**
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*
Incorporated
by reference to Exhibit 10.1 to Cendant Corporation’s Current Report on Form
8-K, filed on April 3, 2006.
**
Confidential treatment has been requested for certain portions of this Exhibit
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended,
which
portions have been omitted and filed separately with the Securities and Exchange
Commission.
This
Current Report on Form 8-K and Exhibit 99.1 hereto contain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933,
as
amended, and Section 21E of the Securities and Exchange Act of 1934, as amended.
These statements are subject to known and unknown risks, uncertainties and
other
factors which may cause the Company’s actual results, performance or
achievements to be materially different from any future results, performance
or
achievements expressed or implied by such forward-looking statements. Statements
preceded by, followed by or that otherwise include the words "believes",
"expects", "anticipates", "intends", "projects", "estimates", "plans", "may
increase", "may fluctuate" and similar expressions or future or conditional
verbs such as "will", "should", "would", "may" and "could" are generally
forward-looking in nature and not historical facts.
You
should consider the areas of risk described under the heading “Forward Looking
Statements” in the Company’s periodic reports under the Securities Exchange Act
of 1934, as amended, and those risk factors included as Exhibit 99 thereto,
titled “Risk Factors Affecting the Company’s Business and Future Results,” in
connection with any forward-looking statements that may be made by the Company
and its businesses generally. Except for the Company’s ongoing obligations to
disclose material information under the federal securities laws, the Company
does not undertake any obligation to release publicly any updates or revisions
to any forward-looking statements, to report events or to report the occurrence
of unanticipated events unless required by law.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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PHH
CORPORATION
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By:
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/s/
Clair M. Raubenstine
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Name:
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Clair
M. Raubenstine
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Title:
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Executive
Vice President and Chief Financial Officer
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Dated:
April 6, 2006
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Exhibit
Index
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10.1
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364-Day
Revolving Credit Agreement, dated as of April 6, 2006, between PHH
Corporation, as Borrower, J.P. Morgan Securities Inc. and Citigroup
Global
Markets Inc., as Joint Lead Arrangers and Joint Bookrunners, the
lenders
referred to therein, and JPMorgan Chase Bank, N.A., as a Lender and
Administrative Agent for the
Lenders.
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10.2
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Amendment
No. 2, dated as of March 31, 2006, to the Amended and Restated Limited
Liability Company Operating Agreement of PHH Home Loans, LLC, dated
as of
January 31, 2005, as amended.*
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10.3
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Management
Services Agreement, dated March 31, 2006, between PHH Home Loans,
LLC and
PHH Mortgage Corporation.**
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*
Incorporated
by reference to Exhibit 10.1 to Cendant Corporation’s Current Report on Form
8-K, filed on April 3, 2006.
**
Confidential treatment has been requested for certain portions of this Exhibit
pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended,
which
portions have been omitted and filed separately with the Securities and Exchange
Commission.