Countrywide Restructuring Charge Up to $150 Million

October 16, 2007 No Comments »

Countrywide said Tuesday that pretax restructuring costs associated with a slowdown in business and the resulting massive layoffs that occurred could be as high as $150 million.

In a U.S. Securities and Exchange Commission filing, Countrywide said the cost of termination benefits will range between $30 and $35 million, while the cost to end leases will cost anywhere between $73 and $89 million.

The lender also expects $22 to $26 million related to the sale of fixed assets, of which $57 million will be charged in the quarter ended September 30, and the remainder in the current quarter.

The company also expects $65 to $90 million of the total charge to result in future cash outlays.

The largest U.S. mortgage lender recently said it eliminated 4,935 jobs last month, leaving 55,932 employed, though many more jobs are expected to be lost between now and December.

I’ve was told weeks ago that Countrywide is actively attempting to buyout operations staff by offering voluntary severance packages, and many expect 20,000 layoffs when everything is said and done.

Over the past couple months, Countrywide has basically exited all of its subprime lending operations, and it believed that the company has closed 46 Full Spectrum Lending branches as a result, a unit many believe will be dissolved entirely.

The mortgage giant will announce earnings next Friday, with the analyst consensus expecting a loss of $1.21 a share, up sharply from earlier estimates that forecasted a profit during the quarter.

An analyst with Goldman Sachs reported that Countrywide may announce charge-offs for bad loans totaling $1 billion over the next two quarters, including $500 million in writedowns for mortgages in the third quarter, and $350 million related to losses in mortgage-backed bonds.

Shares of Countrywide closed Tuesday at $18.09, well below their 52-week high of $45.26.

Leave A Response