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Walter, Green Tree deal closes

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  • | 4:38 p.m. July 5, 2011
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Walter Investment Management Corp.'s acquisition of GTCS Holdings LLC, or "Green Tree," closed today. The deal will change Walter Investment from a real estate investment trust, or REIT, into a business services company that relies on for-service fees as its revenue base. For more information, see below for the original item.

From Mar. 28:

TAMPA — Walter Investment Management Corp. (symbol: WAC) is set to acquire GTCS Holdings LLC — also known as Green Tree — in a transaction valued at $1.065 billion, the company said in a release.

Green Tree is based in St. Paul, Minn. The firm provides third-party services on credit-sensitive consumer loans, and its revenues are fee-based. That contrasts with Walter Investment's existing business model, which largely focuses on interest income.

“The ability to generate revenues from recurring, fee-based sources, with high operating margins from an asset-light platform is an especially attractive addition to our existing business model,” explained Mark O'Brien, CEO and chairman at Walter Investment, in a release.

To complete the acquisition, Walter Investment will issue 1.8 million shares of its stock to Green Tree (worth roughly $32.4 million at $18 a share), assume $20 million of existing Green Tree debt, and issue $765 million in new debt through Credit Suisse and The Royal Bank of Scotland.

The remaining balance will be paid for with cash, the release explained. Financial records show Walter Investment ended 2010 with a cash balance of $114.3 million.

Buying Green Tree could significantly increase Walter Investment's tax burden, because the company will lose its status as a real estate investment trust. In 2009, the company recorded an $81.3 million tax benefit after obtaining REIT status.

Headquartered in Tampa, Walter Investment Management Corp. generated $177 million in revenues in 2010.


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