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PHH Scraps Sale to GE, Blackstone

January 3, 2008

PHH Corp., the New Jersey-based mortgage and auto-leasing company, scrapped a $1.8 billion sale to General Electric Co. and Blackstone Group LP after the buyout firm said banks reneged on an agreement to lend the money, Bloomberg reports. Blackstone's banks refused to finance the purchase of PHH's mortgage division, the New York-based private-equity company said in an e-mailed statement. The lenders, JPMorgan Chase & Co. and Lehman Brothers Holdings Inc., declined to comment. PHH ``will determine in due course whether to continue to explore the company's strategic alternatives,' Chairman A.B. Krongard said in a statement. GE agreed in March to buy the whole company for $31.50 a share and keep the leasing unit. The shares haven't traded at more than $28 since Sept. 17, when PHH said the banks might fail to raise the funds. A record $186 billion of private-equity purchases such as the acquisitions of Harman International Industries Inc. and Affiliated Computer Services Inc. collapsed last year, after losses tied to subprime mortgages cut demand for the higher-yielding loans and bonds used to finance buyouts. JPMorgan, Citigroup Inc., Goldman Sachs Group Inc. and Morgan Stanley have offered discounts of up to 10 percent to clear a backlog of debt after a record $787 billion in leveraged buyouts last year. According to Bloomberg, PHH fell 14 cents to $17.64 in New York Stock Exchange composite trading on Dec. 31, 2007, that’s 37 percent less than its $27.81 price on March 14, the day before the agreement was announced.
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