Daily News: February 11, 2019

Barclays Agents $1.9B DIP Facility to Support Ditech Chapter 11 Process


Mortgage loan originator and servicer Ditech entered into a restructuring support agreement with certain lenders holding more than 75% of the company’s term loans. To facilitate the RSA, Ditech filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York.

The RSA will allow the company to restructure its debt while it continues to evaluate strategic alternatives. Ditech will pursue a recapitalization that deleverages its capital structure by extinguishing over $800 million in corporate debt, and a liquidity enhancing transaction that includes an appropriately sized working capital facility at emergence.

Simultaneously, Ditech will continue to consider a broad range of options, including but not limited to potential transactions such as a sale of the company and/or a sale of all or a portion of the company’s assets, as well as potential changes to the company’s business model.

In connection with the court-supervised process, Ditech received commitments for up to $1.9 billion in debtor-in-possession financing to support its operations during the Chapter 11 process. According to documents filed with the court, Barclays will be acting as administrative agent on the financing.

Meanwhile, the company and its employees remain focused on providing homeowners with the right home financing solutions and the same service they have come to expect from its businesses.

Thomas F. Marano, president and CEO of Ditech, said, “Since we completed a recapitalization last February, we have made important progress on our strategic initiatives and our expense management efforts. However, as a result of market challenges that have continued to accelerate and pressure our business, we must take further action. We intend to use this process to restructure our balance sheet and help us meet our obligations. We will continue to evaluate a broad range of options with the goals of maximizing value and creating the best path forward for our business. We are pleased to have the support of our lenders in this process.”

Weil, Gotshal & Manges is acting as legal counsel, Houlihan Lokey as investment banking debt restructuring advisor and AlixPartners as financial advisor for Ditech over the course of the restructuring.

Kirkland & Ellis is acting as legal counsel and FTI Consulting as financial advisor to the consenting term lenders.