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First Marblehead to get $260.5 million boost from GS Capital Partners
By Lisa Kerner
Charlotte, N.C., Dec. 21 - GS Capital Partners made a $260.5 million cash equity commitment to First Marblehead Corp., it was announced on Friday.
GS Capital will immediately invest $59.8 million to acquire securities convertible into 5.3 million shares of First Marblehead common stock at a conversion price of $11.24 per share, according to a company news release.
Next, GS Capital will invest up to $200.7 million to acquire additional securities convertible into up to 13.4 million shares of common stock, at a conversion price of $15.00 per share. This step is expected to be completed during First Marblehead's current fiscal year.
In total, GS Capital will acquire, on an as-converted basis, 16.7% of First Marblehead's outstanding common stock but will not hold more than 9.9% of the company's voting shares at any time, the release stated.
In addition, Goldman Sachs has committed to offer First Marblehead a $1 billion warehouse facility. With it, First Marblehead has access to a new source of funding to diversify its business model.
The agreement with First Marblehead gives GS Capital one designee to the company's board of directors.
First Marblehead's board eliminated the regular quarterly cash dividend "for the foreseeable future" following the Dec. 21 dividend payment in order to "preserve capital and maximize liquidity in challenging market conditions."
"The fundamentals of our business are strong, and we remain encouraged and excited about our growth prospects," chief executive officer and president Jack Kopnisky said in the release.
"We see strong demand for loans in our second fiscal quarter and continue to believe that private student loans are an important source of college funding."
First Marblehead was advised by Credit Suisse and WilmerHale LLP.
Boston-based First Marblehead provides private education loans.
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