PHH shareholder demands company consider spinoff, remain public

By Lisa Kerner

Charlotte, N.C., Aug. 10 - PHH Corp. shareholders led by Pennant Capital Management, LLC demanded that the company "make serious efforts into exploring a spinoff and present shareholders with an analysis that compares continued public ownership to the proposed sale," in an Aug. 10 letter to PHH board members.

The letter was included as part of a schedule 13D filing with the Securities and Exchange Commission.

Pennant said PHH's latest disclosures strongly support Pennant's rationale "for continued public ownership and a business separation" through a tax-free spinoff.

The investor believes that PHH will be valued at around $60.00 per share in two years if a proposed sale of the company can be prevented.

Pennant increased its stake in PHH to 9.4% with the purchase of an additional 290,000 shares of the company's stock on Aug. 8 and Aug. 9 priced from $25.34 to $25.67 each. Total shares owned by Pennant are 5,048,000.

On March 15, GE Capital Solutions entered into a definitive agreement to acquire PHH in an all-cash transaction for $31.50 per share, or approximately $1.8 billion.

PHH's board of directors unanimously approved the deal to take the company private and recommended its stockholders do the same.

GE Capital agreed to sell the mortgage operations of PHH to an affiliate of the Blackstone Group, a private investment firm, and retain the PHH Arval fleet management services portion of the business, according to a prior company news release.

PHH is a Mount Laurel, N.J., outsource provider of mortgage and vehicle fleet management services.

Danbury, Conn.-based GE Capital Solutions provides leasing, lending and capital investment products and services.

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