It’s a very rewarding trading day for investors in Walter Investment Management Corp (NYSE:WAC) with shares up over 30%, making the stock one of Wall Street’s biggest bulls today. The reason? The mortgage banking firm disclosed that it has entered into a commitment letter with Barclays under which Barclays agreed to increase the financing available to the Company under the following facilities.
Barclays has committed to provide the Company with an upsize of the Facilities with a maximum increase amount of $300,000,000 on the terms and subject to the conditions set forth in the Commitment Letter, with a closing date any time between the date of the Commitment Letter and January 25, 2018 (such date, the “Closing Date”).
The Company may effectuate the Upsize as an increase of up to $150,000,000 (increasing the committed portion of the facility from $100,000,000 to $250,000,000) to the Ditech Facility and up to $150,000,000 (increasing the committed portion of the facility from $300,000,000 to $450,000,000) to the RMS Facility, up to a total (across both Facilities) of $300,000,000.
The Company has experienced reductions in availability under its warehouse and advance facilities, through reductions in the Company’s advance rates, changes to the terms of such facilities and otherwise, which has negatively impacted the Company’s available liquidity and capital resources. The Upsize is expected to better position the Company to ensure it has sufficient liquidity in the near-term, though no assurance can be given that the Company will be successful in maintaining adequate financing capacity with its current or prospective lenders.
On the ratings front, WAC has been the subject of a number of recent research reports. In a report issued on July 14, Oppenheimer analyst Ben Chittenden assigned a Hold rating on WAC. Separately, on May 29, Keefe’s Bose George reiterated a Sell rating on the stock and has a price target of $1.00.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Ben Chittenden and Bose George have a yearly average return of 0.1% and 14.1% respectively. Chittenden has a success rate of 52% and is ranked #2948 out of 4651 analysts, while George has a success rate of 71% and is ranked #108.
Walter Investment operates as a mortgage banking company, which focuses on the servicing and origination of residential loans, including reverse loans. It operates through the following business segments: Servicing, Originations, Reverse Mortgage, and Other. The Servicing segment consists of operations that perform servicing for third-party credit owners of mortgage loans as well as complementary businesses consisting of an insurance agency serving residential loan borrowers and credit owners and a collections agency that performs collections of post charge-off deficiency balances for third parties. The Originations segment originates and purchases mortgage loans through the consumer originations and consumer direct channels. The Reverse Mortgage segment focuses on the origination or purchase, securitization and servicing of reverse loans. The Other segment consists of assets and liabilities of the Non-Residual Trusts, corporate debt, and asset the firm’s management business.