UPDATE 2-Berkshire venture tops PNC for Capmark servicing
* Berkshire venture deal valued at about $468 million
* Talks with PNC fail to produce higher qualifying bid (Updates with judge's approval of sale and background, paragraphs 9-13)
By Tom Hals
WILMINGTON, Del., Nov 24 (Reuters) - Capmark Financial Group Inc [CPFNG.UL] said on Tuesday it would sell its mortgage servicing business to a Berkshire Hathaway-Leucadia joint venture which raised its bid on Monday to about $468 million.
Capmark Financial Group Inc filed for bankruptcy in October with a plan to sell its mortgage servicing business, one of the world's largest, to Berkshire Hathaway Inc (BRKa.N) and Leucadia National Corp (LUK.N) in a venture known as Berkadia, subject to higher bids.
A Capmark attorney, Michael Kessler of Dewey & LeBoeuf, said the company also negotiated with Midland Loan Services, a unit of PNC Financial Services Group Inc (PNC.N).
Midland never put forward a proposal that met the requirements of a qualifying bid, in part because it did not want to buy the entire servicing portfolio and take on all of its 1,000 staff.
Kessler said the Friday bid deadline was extended several times right through to Monday night to give more time for PNC's Midland Loan Services to qualify.
"During the course of the day, Berkadia also increased its bid to, I believe, have us cut off the bid extension deadline to PNC," said Kessler.
On Monday, the Berkshire-Leucadia venture increased its bid to a value of about $468 million. Capmark's prebankruptcy agreement with Berkadia was worth about $408 million, according to Kessler.
Capmark services $288.6 billion in loans, the third-largest commercial and multifamily residential loan portfolio.
The judge, Christopher Sontchi, approved the sale over roughly 20 objections.
"I think this is a terrific result. The employees will keep their jobs and the assets will continue to be serviced," Sontchi said.
The company filed for bankruptcy in October with $20.1 billion in assets and $21 billion in liabilities, one of the biggest victims of the commercial real estate crash.
Capmark originates loans for commercial real estate, such as stores, hotels and multifamily housing. Prior to the credit crisis, the company packaged many of the loans it made into securities which it sold, but continued to service them.
It also operates an investment fund business.
The case is in re: Capmark Financial Group, U.S. Bankruptcy Court, District of Delaware, No. 09-13684.
(Reporting by Tom Hals; Editing by Richard Chang) ((thomas.hals@thomsonreuters.com; 1-302-993-6283; Reuters Messaging: thomas.hals.reuters.com@reuters.net))
