COMPUTERSHARE LIMITED Computershare Limited
ABN 71 005 485 825
Yarra Falls, 452 Johnston Street Abbotsford
Victoria 3067 Australia PO Box 103 Abbotsford Victoria 3067 Australia
Telephone 61 3 9415 5000
Facsimile 61 3 9473 2500 www.computershare.com
Date: | 4 February 2016 |
To: | Australian Securities Exchange |
Subject: | Acquisition of Capital Markets Cooperative, LLC. |
Computershare Limited (ASX: CPU) today announces that it has agreed to acquire Capital Markets Cooperative, LLC. (CMC), based in Florida, USA. The acquisition is subject to US regulatory approvals which are expected to be obtained within three months.
CMC enables a U.S.-wide network of mortgage originators to leverage their collective power to receive better product, service, pricing and liquidity solutions during the processing, sale and servicing of mortgages. CMC has more than 200 originator clients with combined annual loan origination of more than
$100 billion.
The total acquisition price is USD 71.2 million. The price comprises USD 44.0 million for the CMC business plus USD 27.2 million for its current mortgage servicing rights (MSR) portfolio of approximately USD 5.4 billion in unpaid principal balances. The MSR purchase price of USD 27.2 million is net of the sale of an associated excess servicing strip (see further details in the accompanying presentation).
The initial consideration is USD 57.2 million payable on closing along with a maximum of USD 14.0 million in deferred consideration payable over three years.
Computershare's CEO, Stuart Irving, said "We are excited by the acquisition of Capital Markets Cooperative which provides a strong strategic fit with CPU's existing US mortgage servicing footprint. We expect that the combination of CMC with our current operation will help us become a significantly larger, more profitable, higher returning mortgage services business."
More details about this transaction are contained in the attached presentation.
Computershare management will be holding a conference call TODAY to provide an overview of the CMC business.
A recording of the call will be available on the Investor Relations page of our website.
Call details
Date: Thursday 4 February 2016
Time: 9.30am (Melbourne time). Lines are open from 9.15am.
Participant code: 9289542653#
Telephone conference details:
Melbourne: +61 3 8648 8889
Sydney +61 2 8088 0900
For further information contact: Computershare
Mr Darren Murphy
Head of Treasury and Investor Relations Ph +61 3 9415 5102
darren.murphy@computershare.com.au
About Computershare Limited
Computershare (ASX: CPU) is a global market leader in transfer agency and share registration, employee equity plans, proxy solicitation and stakeholder communications. We also specialise in corporate trust, mortgage, bankruptcy, class action and utility administration, and a range of other diversified financial and governance services.
Founded in 1978, Computershare is renowned for its expertise in high integrity data management, high volume transaction processing and reconciliations, payments and stakeholder engagement. Many of the world's leading organisations use us to streamline and maximise the value of relationships with their investors, employees, creditors and customers.
Computershare is represented in all major financial markets and has over 15,000 employees worldwide. For more information, visit www.computershare.com
About Capital Markets Cooperative, LLC.
Founded in 2003 by and based in Jacksonville, Florida, Capital Markets Cooperative, LLC., (CMC) leverages the collective power of a nationwide network of mortgage bankers to negotiate better products, services, pricing and liquidity solutions during the processing, sale and servicing of mortgages. CMC has 200+ Patrons with combined annual production of more than USD 100 billion.
CAPITAL MARKETS COOPERATIVE LLC (CMC)
Chief Executive Officer and President
Chief Financial Officer February 2016
Transaction summary
Strong strategic fit and financially compelling acquisition
Overview of CMC Acquisition rationale
› Leading service provider to mortgage originator clients (known as Patrons) with substantial Mortgage Servicing Rights (MSR) co-issue program (refer to appendix II and glossary for definition)
› MSR co-issue program provides access to MSR from a growing base of 220 small mortgage originator clients (Patrons) at discounts to auction prices
› Clear value proposition to Patrons - service, scale and purchasing power enables Patrons to achieve better economic outcomes than they would on their own
› Strong relationships with those investors who buy mortgage loans and require sub-servicing
› Track record of growth and profitability
› Secures regular flow of new origination MSR for CPU at below auction prices
› ROIC enhanced through ability to buy at below auction prices and sell excess strip (refer to appendix I and glossary for definition) to financial investors to improve returns and reduce capital intensity
› Provides scale enabling CPU to build a growing and sustainable mortgage services business with sub-servicing and ancillary revenue streams
› Creates competitive advantage and efficiencies through creation of a single loan boarding channel:
For Patrons, they can sell or sub-service loans to single provider through same channel
CPU has access to service more loans from one source
› Transaction EV $71.2m:
› $44.0m for CMC business
› $27.2m (post sale of excess strip) for an MSR portfolio with circa $5.4b Unpaid Principal Balances (UPB)
› Expected monthly MSR purchases of $500m in UPB with potential to expand to $1b per month over the next 3 years
› Projected year 1 revenues of $27.2m and Return on Invested Capital ~15%
› Immediately EPS accretive
› Funded from existing cash and available debt facilities. Post transaction net debt/EBITDA ratio expected to remain within CPU's neutral zone of 1.75 to 2.25x
› Subject to approval of / notification to several federal agencies and states
2 All figures are presented in USD
Computershare Ltd. issued this content on 04 February 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 03 February 2016 21:44:30 UTC
Original Document: http://www.computershare.com/News/MA - Acquisition of Capital Markets Cooperative, LLC.pdf
