The sale of PHH Corp. to General Electric Capital Corp. and the Blackstone Group is on the rocks after JP Morgan Chase and Lehman Brothers cut some financing commitment, according to Bloomberg.
Apparently J.P. Morgan and Lehman are reluctant to fund the mortgage portion of the agreement, a move which could leave the deal $750 million short of financing.
Now the Mount Laurel, NJ mortgage outsourcer and vehicle fleet manager must pursue alternative debt financing, which is no guarantee in the current market.
According to PHH, Blackstone will continue to search for debt financing, but is not optimistic.
The deal, announced in March and originally set to close by the end of the year, was supposed to be all-cash transaction valued at about $1.8 billion.
GE Capital planned to acquire PHH for $31.50 per share, immediately selling the mortgage operations to a Blackstone affiliate while holding onto the fleet management business.
Shares of PHH were rocked by the news, shedding $4.31, or 15.12% in midday trading to fall to $24.19, well below the takeover price.