GLEN ALLEN, Va. - Dominion Resources Inc., an energy company based in Richmond, Va., has sold its subprime mortgage unit, Saxon Capital Inc., in a private placement for about $277 million.
Saxon said it was the 14th-largest originator and the 12th-largest servicer of subprime and nonconforming mortgage loans in the first quarter.
The buyer, Saxon Capital Acquisition Corp., formed for the purpose, was described only as a group of 50 to 100 institutional investors and very-high-net-worth individuals in the U.S. and Western Europe, none holding more than a 10% share. Dominion itself bought a 9% position.
The deal, which settled Friday, gave Saxon $100 million in working capital and kept its management intact.
Saxon is one of five financial services units required to be sold as a result of Dominion's $9 billion merger with Consolidated Natural Gas Co. in January 2000. Under federal law Dominion, which originally owned an electricity utility in Virginia, cannot own nonutility businesses if it operates utilities in multiple states - which it picked up from Consolidated.
Officials from Friedman, Billings, Ramsey & Co. Inc. of Arlington, Va., the adviser and agent for the deal, said Saxon Capital was sold in a private placement because that was a quick way to meet a July 15 deadline. They said, however, that they expect to convert the private shares to publicly traded shares within six months.
Saxon Capital will continue to originate, purchase, securitize, and service nonconforming mortgage and home equity loans.
Dominion will retain about $300 million of mortgage assets related to prior loan securitizations, which Saxon will continue to manage.
