PennyMac Financial Services, Inc. (NYSE:PFSI) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01Entry into a Material Definitive Agreement.
On February 16, 2017, PennyMac Financial Services, Inc. (the
Company), through the Companys indirect subsidiary, PNMAC GMSR
ISSUER TRUST (Issuer Trust),issued an aggregate principal amount
of $400 million in secured term notes (the Term Notes)to
qualified institutional buyers under Rule 144A of the Securities
Act of 1933, as amended (the Securities Act). The Term Notes bear
interest at a rate equal toone-month LIBOR plus4.75% per annum,
payable eachmonth beginning in February2017, on the 25th day of
such month or, if such 25th day is not a business day, the next
business day. The Term Notes will mature on February 25, 2020or,
if extended to the terms of the Term Note Indenture Supplement
(as defined below), February 25, 2021 (unless earlier redeemed in
accordance with their terms). The Term Notesrankpari passuwith
that certain Series 2016-MSRVF1 Variable Funding Note
datedDecember 19, 2016 (the VFN), issued by Issuer Trust to one
of the Companys indirect controlled subsidiaries, PennyMac Loan
Services, LLC (PLS), and are secured by certain participation
certificates relating to Ginnie Mae mortgage servicing rights
(MSRs) and excess servicing spread relating to such MSRs (ESS)
that are financed to a structured finance transaction, which is
further described in the Companys Current Report on Form 8-K
filed on December 21, 2016 (the GNMA MSR Facility).
The Term Notes have not been and are not expected to be
registered under the Securities Act or any state securities laws
and, unless so registered, may not be offered or sold in the
United States or to U.S. persons absent an applicableexemption
from the registration requirements of the Securities Act and
applicable state securities laws.
The Amended and Restated Base Indenture
The Term Notes were issued to the terms of (i) an amended and
restated base indenture, dated as of February 16, 2017, by and
among Issuer Trust, Citibank, N.A., as indenture trustee,
calculation agent, paying agent and securities intermediary (the
Indenture Trustee), PLS, as the servicer and administrator,
Credit Suisse First Boston Mortgage Capital LLC (CSFB), as
administrative agent, and Pentalpha Surveillance LLC, as credit
manager (the Amended Base Indenture); (ii) a Series 2017-GT1
indenture supplement, dated as of February 16, 2017, to amended
and restated base indenture dated February 16, 2017 (the Term
Note Indenture Supplement); and(iii) an omnibus amendment no. 1,
dated as of February 16, 2017,by and among Issuer Trust,
Indenture Trustee; PLS and CSFB (the Omnibus Amendment)to the
Series 2016-MSRVF1 indenture supplement (the VFN Supplement) and
Series 2016-MBSADV1 indenture supplement (the ADV Supplement).
The Amended Base Indenture, which amends and restates that
certain base indenture dated as of December 16, 2016 and executed
in connection with the closing of the GNMA MSR Facility, requires
Issuer Trustand PLS to make certain representations and
warranties customary for secured financing transactionsand also
requires PLS to maintain various financial and other covenants,
which include maintaining (i) an adjustable net worth equal to or
greater than 50% of the Ginnie Mae Single-Family Issuer minimum
net worth requirement, (ii) liquidity equal to or greater than
50% of the Ginnie Mae Single-Family Issuer minimum liquidity
requirement or, if the aggregate monetary value of all
out-of-pocket advances on Ginnie Mae mortgage backed securities
exceeds the Single-Family Issuer minimum liquidity requirement,
50% of such minimum liquidity requirement, and (iii) a minimum
fair market value relating to its base servicing fee. In the
event PLS breaches one or more of these financial covenants, the
noteholders have the right to reduce theadvance rate available to
PLS under the Term Notes.
In addition, the Amended Base Indenture contains events of
default (subject to certain materiality thresholds and grace
periods), including payment defaults on any series or class of
notes, breaches of covenants and/or certain representations and
warranties, cross-defaults, guarantor defaults, bankruptcy or
insolvency proceedings and other events of default customary for
secured financing transactions. The remedies for such events of
default include the acceleration of the principal amount
outstanding under the Amended Base Indenture and the liquidation
of the MSRs and ESS by the Indenture Trustee on behalf of the
noteholders of any notes issued by the Issuer Trust. If an event
of default has occurred and is continuing with respect to any
series of notes issued by the Issuer Trust, the Indenture Trustee
is responsible for exercising any such rights and powers vested
in it by the Amended Base Indenture on behalf of the
noteholders.In connection with Issuer Trusts issuance of the Term
Notes, PLS and Issuer Trust have also agreed to repurchase a
portion of the Term Notes to the extent Issuer Trust shall not
have obtained a B rating on such Term Notes by November 1, 2017.
The foregoing descriptions of the Amended Base Indenture, the
Term Note Indenture Supplement andthe Omnibus Amendment do not
purport to be complete and are qualified in their entirety by
reference to the full text of such
agreements, which have been filed with this Current Report on
Form 8-K as Exhibit 10.1, Exhibit 10.2 and Exhibit 10.3,
respectively.
PC Repurchase Agreement
On February 16, 2017, the Company, through Issuer Trust, as
buyer, PLS, as seller, and the Companys direct controlled
subsidiary, Private National Mortgage Acceptance Company, LLC
(PNMAC), as guarantor, also entered into an amendment to that
certain master repurchase agreement dated as of December 19,
2016 (thePC Repurchase Agreement), to which PLS finances all of
its right, title and interest in, to and under participation
certificates representing beneficial interests in MSRs and ESS,
including all of its rights and interests in any MSRs and ESS
it thereafter owns or acquires.The principal amount paid by
Issuer Trust for the participation certificates under the PC
Repurchase Agreement is based upon a percentage of the market
value of the underlying MSRs (inclusive of the ESS). Upon PLS
repurchase of the participation certificates, PLS is required
to repay Issuer Trust the principal amount relating thereto
plus accrued interest (at a rate reflective of the current
market and consistent with the weighted average note rate of
the VFN and any outstanding Term Notes) to the date of such
repurchase.The obligations of PLS are guaranteed in full by
PNMAC (the PNMAC Guaranty).
The primary purposes of the amendment to the PC Repurchase
Agreementwere to (i) provide additional rights of payment to
the qualified institutional buyers in certain circumstances
relating to early principal payments on the Term Notes as
described in the Term Note Indenture Supplement;(ii) expand the
remedies for an event of default by allowing the use of PLS
collections of advance reimbursements on the MSRsotherwise due
to PLS to repay Credit Suisse AG, Cayman Islands Branch for any
advances it may be required to make under the ADV Supplement,
as amended; and (iii) include an additional event of default
relating to PNMACs default under the PNMAC Guaranty. The PNMAC
Guaranty was also amended to add additional representations and
warranties, covenants and events of default, in each case
customary for guaranties of secured financing transactions.
In connection with Issuer Trusts issuance of the Term Notes and
additional borrowings under the PC Repurchase Agreement by PLS,
PLS received net proceeds of approximately $395 million, after
deducting estimated fees and expenses. The Company intends to
use the net proceeds of the offering for general corporate
purposes, including the acquisition of additional MSRs.
Other material terms of the PC Repurchase Agreement, the PNMAC
Guaranty,the VFN Repurchase Agreement and the VFN Supplementare
described more fully in the Companys Current Report on Form 8-K
filed on December 21, 2016. The foregoing descriptions of the
PC Repurchase Agreement, the PNMAC Guaranty,the VFN Repurchase
Agreement and the VFN Supplementdo not purport to be complete
and are qualified in their entirety by reference to (i) the
full text of Amendment No. 1 to Master Repurchase Agreement
which has been filed with this Current Report on Form 8-K as
Exhibit 10.4; (ii) the description of the PC Repurchase
Agreement in the Companys Current Report on Form 8-K as filed
on December 21, 2016 and the full text of the PC Repurchase
Agreement attached thereto as Exhibit 10.3; (iii) the full text
of the Amendment No. 1 to Guaranty which has been filed with
this Current Report on Form 8-K as Exhibit 10.5; (iv) the
description of the PNMAC Guaranty in the Companys Current
Report on Form 8-K as filed on December 21, 2016 and the full
text of the PNMAC Guaranty attached thereto as Exhibit 10.6;
(v) the description of the VFN Repurchase Agreement in the
Companys Current Report on Form 8-K as filed on December 21,
2016 and the full text of the VFN Repurchase Agreement attached
thereto as Exhibit 10.9; and (vi) the description of the VFN
Supplement in the Companys Current Report on Form 8-K as filed
on December 21, 2016 and the full text of the VFN Supplement
attached thereto as Exhibit 10.2.
Item 2.03Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.
The information set forth under Item 1.01 of this report is
incorporated herein by reference.
Item 9.01Financial Statements and Exhibits.
(d)Exhibits.
|
Exhibit No. |
Description |
|
10.1 |
Amended and Restated Base Indenture, dated as of |
|
10.2 |
Series 2017-GT1 Indenture Supplement, dated as of |
|
10.3 |
Omnibus Amendment No. 1 to the Series 2016-MSRVF1 |
|
10.4 |
Amendment No. 1 to Master Repurchase Agreement, dated |
|
10.5 |
Amendment No. 1 to Guaranty, dated as of February 16, |
About PennyMac Financial Services, Inc. (NYSE:PFSI)
PennyMac Financial Services, Inc. (PFSI) is a financial services company. The Company is focused on the production and servicing of the United States residential mortgage loans and the management of investments related to the United States mortgage market. It operates through three segments: loan production, loan servicing and investment management. Its loan production segment is sourced through approximately two channels: correspondent production and consumer direct lending. Its loan servicing segment performs loan administration, collection and default management activities, including the collection and remittance of loan payments; response to customer inquiries; accounting for principal and interest; counseling delinquent mortgagors, and supervising foreclosures and property dispositions. Its investment management segment represents the activities of the Company’s investment manager, which include sourcing, performing diligence, bidding and closing investment asset acquisitions. PennyMac Financial Services, Inc. (NYSE:PFSI) Recent Trading Information
PennyMac Financial Services, Inc. (NYSE:PFSI) closed its last trading session up +0.10 at 18.35 with 152,610 shares trading hands.
