Blackstone Tries to Revive PHH Deal

MOUNT LAUREL, N.J. – The Blackstone Group is working with its investment banks to raise more capital for the buyout of PHH Mortgage–a critical component of the proposed takeover of parent PHH Corp. by GE Capital, the private equity giant said yesterday. PHH reported earlier this week Blackstone had notified GE Capital it had fallen as much as $750 million short on the required financing, jeopardizing completion of the deal. Blackstone will continue its efforts to obtain debt financing but is not optimistic, PHH said. Blackstone also has said there can be no assurances that conditions to closing the deal will be satisfied, PHH added. Under terms of the transaction, GE will acquire PHH Corp. for $1.8 billion and retain PHH’s fleet management operations, while selling the mortgage operations to Blackstone. The stakes for credit unions are huge, as PHH has become the largest mortgage bank for credit unions after its 2005 acquisition of CUNA Mutual Group’s mortgage operations. That added a $12 billion servicing portfolio and relationships with 2,000 credit unions to PHH’s already vast credit union operations.