H&R Block Closes Sale of Option One Mortgage Servicing Business to Affiliate of WL Ross & Co. LLC.
-- Aggregate servicing debt of more than $980 million repaid in
full
-- Net cash proceeds of more than $230 million
-- Company's short-term bank credit lines repaid in full
-- Transaction not expected to result in significant gain or loss
in reported financial results
KANSAS CITY, Mo.--(Business Wire)--
H&R Block Inc. (NYSE:HRB) today announced that it closed the sale
of the mortgage loan servicing business of its Option One Mortgage
Corporation ("OOMC") subsidiary effective April 30, 2008. As
previously announced, the purchaser was American Home Mortgage
Servicing, Inc. ("American Home"), an affiliate of WL Ross & Co. LLC.
Proceeds of the transaction at closing were approximately $1.3
billion.
"The closing of the Option One sale is a significant milestone in
the transformation and refocusing of H&R Block," said Richard C.
Breeden, H&R Block's Chairman. "We are pleased to safely transfer the
servicing responsibilities of Option One into the hands of a respected
and responsible purchaser. More importantly, we delivered on the
promise we made to shareholders to change the future course of our
company. Today's transaction reduces risks and distractions from doing
what we do best, which is serving the tax preparation needs of tens of
millions of clients."
At closing, the Company utilized the proceeds in part to repay
more than $980 million on its servicing advance facility, representing
the entire outstanding balance of this facility. After repayment of
servicing advances, the Company realized net cash proceeds of slightly
more than $230 million, and also retained a receivable relating to
certain servicing assets of approximately $100 million. The Company
anticipates that it will realize approximately $57 million of this
receivable over the next 60 days, with the balance representing a
long-term receivable. As previously announced, the Company does not
believe that the transaction will result in a significant increase or
decrease in reported income, although the impact of the transaction on
reported income will not be known definitively until the completion of
all post-closing adjustments.
In addition, the Company also announced that it completed
repayment of the entire outstanding balance under its revolving
committed line of credit ("CLOC") from a syndicate of lending banks.
With the repayment of the entire outstanding balance of both its
servicing advance facility and its CLOC, the Company's outstanding
short-term indebtedness has been reduced to zero.
H&R Block's financial advisor in connection with the transaction
was Lazard and legal advisors included the law firms of Jones Day and
Manatt, Phelps & Phillips.
Forward Looking Statements
This announcement may contain forward-looking statements, which
are any statements that are not historical facts. These
forward-looking statements are based upon the current expectations of
the company and there can be no assurance that such expectations will
prove to be correct. Because forward-looking statements involve risks
and uncertainties and speak only as of the date on which they are
made, the company's actual results could differ materially from these
statements. These risks and uncertainties relate to, among other
things, uncertainties in the subprime mortgage industry and its impact
on any operations of Option One Mortgage Corporation that continue to
be operated by H&R Block; potential litigation and other contingent
liabilities arising from Option One Mortgage Corporation's historical
and ongoing operations; uncertainties pertaining to the commercial
debt market; competitive factors; regulatory capital requirements; the
company's effective income tax rate; litigation; uncertainties
associated with engaging a new auditor; and changes in market,
economic, political or regulatory conditions. Information concerning
these risks and uncertainties is contained in Item 1A of the company's
2007 annual report on Form 10-K and in other filings by the company
with the Securities and Exchange Commission.
About H&R Block
H&R Block Inc. (NYSE:HRB) is the world's preeminent tax services
provider, having served more than 400 million clients since 1955 and
generating annual revenues of $4 billion in fiscal year 2007. H&R
Block provides income tax return preparation and related services and
products via a nationwide network of approximately 13,000
company-owned and franchised offices and through TaxCut(R) online and
software solutions. The company also provides business services
through RSM McGladrey and certain consumer financial services. For
more information visit our Online Press Center at www.hrblock.com.
H&R Block Inc.
Scott Dudley, 816.854.4505 (Investor Relations)
scott.dudley@hrblock.com
Nancy Mays, 816.854.4537 (Media Relations)
nmays@hrblock.com
Copyright Business Wire 2008
