Mr. Cooper Group Inc. (NASDAQ:COOP), through its subsidiary Nationstar Mortgage Holdings Inc., announced on Thursday the closure of a $750 million senior notes offering. The 6.5% senior notes, due in 2029, were sold to initial purchasers in a private offering exempt from registration under the Securities Act.
The proceeds from the offering are earmarked for repaying a portion of the outstanding amounts under the company's mortgage servicing rights (MSR) facilities. The notes, accruing interest from Thursday, are payable semi-annually with the first payment due on February 1, 2025.
The notes were issued under an indenture agreement, which includes customary covenants and events of default for non-investment grade debt securities. Among the limitations are restrictions on incurring additional debt, issuing preferred shares, paying dividends, making investments, and asset sales.
Nationstar may redeem the notes at a make-whole price before August 1, 2026, or up to 40% of the notes with equity offering proceeds at 106.5% of their principal amount. Post-August 1, 2026, redemptions are at prices specified in the indenture.
In case of a change of control, note holders may require Nationstar to repurchase their notes at 101% of the principal amount, plus accrued interest. The notes rank senior to any future subordinated debt and equally with current and future senior indebtedness but are effectively subordinated to secured debts to the extent of the collateral's value.
The notes and their guarantees by Mr. Cooper and certain subsidiaries are unsecured and senior obligations, with the same ranking stipulations as the notes themselves. They are structurally subordinated to the indebtedness of non-guaranteeing subsidiaries.
Furthermore, the company announced plans for a strategic acquisition of Flagstar's mortgage operations for $1.4 billion. This move is expected to add 1 to 1.5 points to the company's return on equity. Piper Sandler has responded to these developments by maintaining an Overweight rating on the stock and increasing its price target to $106 from the previous $91.
Moreover, the company has expressed plans to continue its stock repurchase program, buying back approximately $50 million of stock per quarter. These recent developments underscore Mr. Cooper Group's strategic efforts to bolster its portfolio and enhance shareholder value. These are the latest in a series of moves by Mr. Cooper Group to navigate its capital structure effectively.
InvestingPro Insights
As Mr. Cooper Group Inc. (NASDAQ:COOP) secures its financial position through strategic debt management, real-time data and insights from InvestingPro offer a broader perspective on the company's performance and outlook. With a solid market capitalization of $5.63 billion and an attractive P/E ratio of 8.03, Mr. Cooper Group presents a compelling financial profile. Notably, the company's revenue has seen a significant uptick, with a 30.45% growth over the last twelve months as of Q2 2024, underscoring its robust financial health.
InvestingPro Tips further enrich the narrative, indicating that analysts are optimistic about the company's earnings, with 5 analysts revising their earnings upwards for the upcoming period. Additionally, the company's strong performance is not limited to the short term; it has demonstrated a high return over the last year and a substantial price increase over the last six months. These factors, combined with the prediction that the company will remain profitable this year and its liquid assets surpassing short-term obligations, paint a picture of a financially sound and growing enterprise.
For readers interested in deeper financial analysis and additional insights, InvestingPro offers a total of 9 tips on Mr. Cooper Group, available at https://www.investing.com/pro/COOP. These tips provide a comprehensive understanding of the company's financial trajectory and investment potential.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.