WEST PALM BEACH – Onity Group Inc. (NYSE:ONIT), a prominent mortgage servicer and originator, has announced its intention to offer $475 million in Senior Notes due 2029 through PHH Escrow Issuer LLC, a subsidiary of PHH Corporation. The offering is contingent on market conditions and other factors.
The proceeds from the Senior Notes sale, along with additional funds from Onity, are set to be placed into escrow. The release of these funds is subject to the completion of Onity's sale of its 15% stake in MSR Asset Vehicle LLC to Oaktree Capital Management-affiliated funds.
Once the escrow conditions are met, PHH Corporation will co-issue the notes, and Onity, along with certain PHH subsidiaries, will guarantee them. The capital raised will be utilized, in combination with the proceeds from the aforementioned sale and Onity's cash on hand, to redeem PHH Mortgage Corporation’s outstanding 7.875% Senior Notes due 2026 and Onity’s 12.00%/13.25% Senior Second Lien Notes due 2027.
The notes and their guarantees will not be registered under the Securities Act of 1933 and are being offered only to qualified institutional buyers and non-U.S. persons outside the United States, in accordance with Rule 144A and Regulation S.
Onity, headquartered in West Palm Beach, Florida, operates through PHH Mortgage and Liberty Reverse Mortgage. PHH Mortgage is a major servicer in the U.S., while Liberty Reverse Mortgage ranks among the nation's largest reverse mortgage lenders.
The press release also included forward-looking statements regarding the notes offering and the use of proceeds, cautioning that the actual events may differ due to various risks and uncertainties. It was emphasized that the offering size could change, or the offering could be withdrawn. Additionally, there is no guarantee that the conditions for releasing escrowed funds will be met.
This news is based on a press release statement from Onity Group Inc. The company has clarified that the press release does not constitute an offer to sell or a solicitation of an offer to buy any securities.
In other recent news, Onity Group Inc. has been active in capital restructuring and asset acquisitions. The company has extended its subservicing agreements with Rithm Capital Corp until February 2025, a move that will not materially affect Onity's financial health or ability to service its debt. Onity has also announced its intention to acquire substantial assets from Mortgage Assets Management, LLC and investment funds managed by Waterfall Asset Management, LLC, valued at approximately $55 million. These assets include Home Equity Conversion Mortgage reverse mortgage loans and mortgage servicing rights.
In addition to these developments, Onity Group has sold its 15% stake in MSR Asset Vehicle LLC to Oaktree Capital Management, L.P. for an estimated $49 million. The company also plans to redeem at least $150 million of its 13.25% 2027 notes and has already repaid $23.5 million of its 7.875% PHH notes. B.Riley has maintained a Buy rating for Onity, reflecting confidence in these restructuring moves.
Finally, Onity Group plans to further reduce its leverage by refinancing the remaining 7.875% notes through a debt offering. These recent developments are part of Onity Group's ongoing strategy to improve its financial health and are expected to immediately enhance earnings and cash flow.
InvestingPro Insights
As Onity Group Inc. (NYSE:ONIT) prepares to offer $475 million in Senior Notes, investors may find additional context from recent financial data and expert insights valuable. According to InvestingPro data, Onity's market capitalization stands at $235.67 million, reflecting the company's current market valuation as it undertakes this significant debt offering.
The company's revenue for the last twelve months as of Q2 2024 was reported at $1,018.2 million, with a gross profit margin of 94.79%. This high margin suggests Onity maintains strong profitability in its core operations, which could be reassuring for potential note buyers.
InvestingPro Tips highlight that Onity's stock price movements have been quite volatile, which aligns with the nature of the mortgage industry and current market conditions. Interestingly, despite this volatility, the company has shown a strong return over the last three months, with InvestingPro data indicating a 20.84% price total return over this period.
Another relevant InvestingPro Tip notes that analysts predict the company will be profitable this year. This projection could be significant for investors considering the new debt offering, as it suggests the company may have the capacity to service its debt obligations.
For those seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Onity, providing a deeper understanding of the company's financial health and market position.
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