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Countrywide Deal Has $160 Million Termination Fee
January 18, 2008 / 6:31 AM / 10 years ago

Countrywide Deal Has $160 Million Termination Fee

NEW YORK (Reuters) - Mortgage lender Countrywide Financial Corp CFC.N may have to pay Bank of America Corp (BAC.N) a fee of $160 million if a deal to buy it falls through, according to a regulatory filing on Thursday.

Bank of America said on Jan. 11 it would buy mortgage lender Countrywide Financial Corp for 0.1822 of a Bank of America share, valuing Countrywide at the time at $7.16 per share or $4 billion. The filing with the U.S. Securities and Exchange Commission said the merger agreement provides that, if the deal is terminated under specified circumstances, Countrywide may be required to pay Bank of America a termination fee of $160 million.

    Countrywide has been convulsed by mounting losses and defaults, a loss of access to credit markets and a slew of lawsuits and regulatory probes into its lending practices and Chief Executive Angelo Mozilo’s pay.

    Mozilo stands to receive about $36.4 million if the company he founded is sold as planned to Bank of America, according to previous regulatory filings and compensation experts.

    The filing on Thursday did not indicate that Mozilo would get a retention payment, however. It said that its Compensation Committee approved the grant of certain retention awards to executives Eric P. Sieracki, David Sambol, Ranjit M. Kripalani and Carlos M. Garcia.

    Reporting by Megan Davies; Editing by Andre Grenon

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