Blackstone Financing for PHH Deal in Jeopardy -- Reuters

Blackstone Group's planned $1.8B buyout of PHH Corp. is in danger of falling apart as Blackstone still hasn't succeeded in resolving a financing shortfall for the deal. Reuters reported sources close to the deal as saying talks with JPMorgan Chase and Lehman Brothers Holdings are not going well, and that the banks are not willing to budge from their "revised interpretation" of their financing agreement, which has resulted in a $750M shortfall in the financing needed to complete the deal. Under the agreement, PHH would sell its vehicle-leasing business to General Electric Capital Corp., and Blackstone would buy the company's mortgage business. But the GE portion is likely to fall through as well if Blackstone doesn't buy the mortgage operations. The sources said Blackstone was unlikely to make up for the shortfall, and that other options were dwindling. Blackstone is to let PHH know by the end of the month whether it can complete the deal. The transaction is one of many that financing issues have placed in jeopardy as a result of the credit crisis.

Sources: Reuters
Commentary: PHH Worth Waiting For - Barron's • PHH Corporation: Pennant Capital Opposes Sale, Outlines Omissions from Preliminary Proxy
Stocks to watch: PHH, GE, BX, LEH, JPM

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