Ditech Holding Corp. is considering steps that could include the sale of the company. It’s not the first time that Ditech’s chief has overseen a large distressed mortgage firm.
On Wednesday, the Fort Washington, Pennsylvania-based mortgage-banking organization disclosed that it has initiated a process to evaluate strategic alternatives.
The steps are being taken to address inquiries received by the board of Ditech, which recently emerged from bankruptcy and changed its name from Walter Investment Management Corp.
“The board has initiated a process to evaluate strategic alternatives to enhance stockholder value,” today’s statement read. “This review process, which is being conducted with the assistance of financial and legal advisors, will consider a range of potential strategic alternatives, which will include, among others, a sale of the company, a business combination or continuing as a standalone entity.”
While Ditech reported a $467 million first-quarter profit, the income reflected $521 million earned by Walter from Jan. 1 through Feb. 9. But from Feb. 10 through March 31, after the bankruptcy was completed, Ditech suffered a $54 million loss — putting the pace of quarterly losses potentially near $100 million.
David Lykken, who consults mortgage banking firms through Transformational Mortgage Solutions, noted, “Sadly, this is just the beginning of many more stories to come of this nature.”
Houlihan Lokey has been engaged by Ditech as financial advisor, while Weil, Gotshal & Manges LLP has been hired as legal counsel.
Ditech noted in the statement that it is not certain that a transaction will happen, and it doesn’t intent to provide updates unless a deal is reached. There is no timetable for the strategic review.
“Having completed our financial restructuring and as we focus on optimizing our business, our board believes that now is the right time to review the company’s strategic alternatives to assess how best to drive value for our stockholders,” Ditech Chief Executive Officer, President and Chairman Tom Marano said in the statement.
It’s not the executive’s first time overseeing a large bankrupt mortgage company.
Marano, who was just hired as Ditech CEO in April, was chairman and CEO of Residential Capital LLC as the mega-lender was forced into bankruptcy in 2012. ResCap eventually liquidated.
