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Walter Investment Management Corp : Walter Investment Management Corp. Announces Definitive Agreement To Acquire Security One Lending

01/02/2013 | 08:05am US/Eastern
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TAMPA, Fla., Jan. 2, 2013 /PRNewswire/ -- Walter Investment Management Corp. (NYSE MKT: WAC) ("Walter Investment" or the "Company") announced the signing on December 31, 2012 of a definitive agreement to acquire 100% of the stock of Security One Lending ("S1L") in a transaction valued at up to $31 million. The purchase price consists of $20 million in cash paid at the time of signing and up to an $11 million additional earn out to be paid upon the achievement by S1L of certain designated performance targets over the next twelve months. Closing is contingent upon the receipt or waiver of required regulatory approvals and other consents. Based on a full $31 million purchase price and estimated results pro forma for expected synergies with the Company's Reverse Mortgage Solutions subsidiary ("RMS"), the acquisition represents a 2x multiple of 2012 EBITDA and approximately 1x 2013 estimated EBITDA. The transaction is expected to be immediately accretive to Walter Investment.

S1L, based in San Diego, California is owned by management, independent investors and in part by funds managed by Jacobs Asset Management, LLC. S1L is a retail and wholesale reverse mortgage loan originator that has been increasing its presence in the reverse mortgage origination space since its inception in November of 2006. During 2012, S1L originated nearly 5,000 reverse mortgage loans with an aggregate unpaid principal balance of over $700 million. RMS has a long-standing relationship with S1L, as S1L has been delivering loans using RMS's technology and RMS has acquired more than 60% of S1L's reverse origination production during 2012. The strategic acquisition of S1L will enhance RMS's position as the leading issuer of reverse mortgage product in the sector, while also significantly increasing RMS's retail origination presence.

Mark J. O'Brien, Chairman and CEO of Walter Investment said, "We are extremely pleased to add the S1L business to the Walter Investment portfolio. This addition is a key step in achieving our previously stated goal to increase the retail mix of RMS's originations business. S1L has developed a robust retail and wholesale origination presence in the reverse mortgage market, with 20 branches and nearly 400 loan officers in the field, which we believe provides an attractive complement to the already strong correspondent origination program at RMS. This acquisition creates a combined platform with diverse, established originations channels without significant overlap. Additionally, S1L is managed by a seasoned team with deep experience in both the reverse and forward mortgage spaces, which adds significant depth to the existing RMS management structure."

"We continue to believe the reverse mortgage sector has very attractive long-term growth prospects," continued O'Brien, "and believe S1L is uniquely positioned to help us capitalize on these prospects by capturing greater market share in the coming year. We anticipate that the pooled strengths of our businesses will enhance our ability to take advantage of these opportunities."

Approvals and Timing

The Board of Directors of Walter Investment has approved the transaction. The closing of title is subject to receipt or waiver of governmental approvals and third-party consents and the satisfaction of other customary closing conditions. The Company expects to complete the transaction during the first quarter of 2013.

About Walter Investment Management Corp.

Walter Investment Management Corp. is an asset manager, mortgage servicer and originator focused on finding solutions for consumers and credit owners. Based in Tampa, Fla., the Company has over 2,900 employees and services a diverse loan portfolio. For more information about Walter Investment Management Corp., please visit the Company's website at www.walterinvestment.com.

About Security 1 Lending

Security 1 Lending is a retail and wholesale reverse loan originator. Based in San Diego, California, S1L has approximately 565 employees. For more information about Security 1 Lending, please visit the S1L website at www.s1l.com.

Disclaimer and Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements, including forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements include, but are not limited to, statements concerning Walter Investment's plans, beliefs, objectives, expectations and intentions and other statements that are not historical or current facts. Forward-looking statements are based on Walter Investment's current expectations and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such forward-looking statements. Factors that could cause Walter Investment's results to differ materially from current expectations include, but are not limited to: the achievement of expected synergies, the Company's ability to shift potential customers to other HECM reverse mortgage products, continued support of the reverse mortgage sector from GSEs, other changes, of which we are not aware, that FHA and the other GSEs may make to the reverse mortgage product; and other factors relating to our business in general as detailed in Walter Investment's 2011 Annual Report on Form 10-K and other periodic reports filed with the U.S. Securities and Exchange Commission. In addition, these statements are based on a number of assumptions that are subject to change. Accordingly, actual results may be materially higher or lower than those projected. The inclusion of such projections herein should not be regarded as a representation by Walter Investment that the projections will prove to be correct. This press release speaks only as of this date. Walter Investment disclaims any duty to update the information herein.

SOURCE Walter Investment Management Corp.

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