Headquartered in California loan library A deal has been completed to extend $497.7 million of senior notes due in the fourth quarter of 2025, resulting in new debt with higher interest rates and shorter maturities than typically seen by similar companies in the market.
Loan Warehouse Subsidiary, LD Holding Group Co., Ltd., According to an 8-K filing with the U.S. Securities and Exchange Commission on Thursday, the company will exchange outstanding senior notes due 2025 (interest rate 6.5%) for senior secured notes due 2027 (interest rate 8.75%) . Securities and Exchange Commission (U.S. Securities and Exchange Commission).
Investors representing 96% of the old notes tendered and accepted the deal.
The new notes will cost the company $525.6 million, leanDepot estimates. This includes $340.6 million principal amount of new notes secured by, among other things, $60 million of non-agency mortgage servicing rights (MSRs), and $100.6 million aggregate principal amount of 2028 senior notes held in securities accounts. ARTEMIS MANAGEMENT LIMITED.
The company also paid $185 million in cash – the upper end of the deal’s cash consideration. As of the end of March, the company reported a cash balance of $604 million.
Analysts see loan deferrals as a way to buy time for a return to profitability amid pressure from a shrinking mortgage origination environment.
“Looking ahead, we have reduced leverage on our balance sheet and significantly extended our debt maturities,” LoanDepot President and CEO Frank Martell said in a statement.
Martell added that the company has invested in a “Vision 2025” plan to bring investment to the platform, product and people. Earlier this week, loanDepot announced the promotion of Viviana Abarca, who has been with the company for 11 years, to general manager of mortgage operations.
Martell said the debt extension and Vision 2025 strategic plan will allow the company to “accelerate growth and return to profitability as markets return to health.”
From January to March, loanDepot’s non-GAAP adjusted net loss was $38 million, compared with a loss of $26.6 million in the previous quarter and a loss of $59 million in the first quarter of 2023. Productivity plans to return to profitability.
LoanDepot has set the settlement date for the exchange offer as June 24, at which time approximately $19.7 million in aggregate principal amount of the old notes will remain outstanding.
