Nationstar Merging With Former WaMu Bank Parent

February 21, 2018

The former parent of Washington Mutual Bank is merging with Nationstar Mortgage Holdings Inc. The transaction follows the sale of Nationstar's primary shareholder.

 

A news release Tuesday indicated that the parent of Nationstar Mortgage LLC has agreed to merge with Seattle-based WMIH Corp. The surviving entity will maintain the Nationstar brand and Dallas headquarters.

 

Nationstar shareholders will receive $1.2 billion in cash and $702 million in shares of WMIH -- the new symbol for the combined company's common shares to be traded on NASDAQ.

 

The combined board of directors will include three from WMIH and four from Nationstar despite that WMIH shareholders will own approximately 64 percent of the combined company and Nationstar shareholders will hold just 36 percent.

 

The statement said Nationstar's operations will continue as normal, and employees will join the combined company. Current senior leaders at Nationstar will carry on to lead the combined firm.

 

WMIH Corp. was formerly known as Washington Mutual Inc., the parent of Washington Mutual Bank until it was seized by the Office of Thrift Supervision in September 2008. The bank-holding company filed bankruptcy in 2008 and emerged in March 2012 with a reorganization plan.

Currently, its primary business is a legacy reinsurance business operating in runoff mode. Its shareholders are institutional investors including its largest investor, KKR.

 

WMIH says it has roughly $600 million in cash and a whopping $6 billion in federal net operating loss carry forwards that aren't subject to annual use limitation and will not begin to expire until 2032.

 

"An entity owned by investment funds managed by an affiliate of Fortress Investment Group LLC, holding approximately 68 percent of Nationstar's voting shares, has contractually agreed to support the transaction and elect cash consideration for approximately 34 million shares, subject to proration," today's statement said.

 

Fortress, itself, was acquired by SoftBank Group Corp. in December 2017 for $3.3 billion in cash.

 

KKR, which owns 24 percent of WMIH's voting shares, reportedly supports the transaction. -- which is expected to close in the second half of this year.

Nationstar, which operates as "Mr. Cooper," was previously known as Centex Home Equity Co. When it first began operating in the early nineties, it was known as Nova Credit Corp.

 

It originated $14 billion during the first nine months of last year, and its servicing portfolio as of Sept. 30, 2017, was $533 billion -- the biggest of any non-bank servicer.

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