TA Associates, a Boston venture capital firm, has agreed to sell its remaining stake in Midcoast Mortgage Corp. to a Florida-based residential lender.
An effort to sell the whole company more than a year ago fell through, and TA Associates has been selling Midcoast piecemeal.
Shorewood Associates, Lake Worth, Fla., will pay $15.5 million to TA Associates for Midcoast's corporate entity and few remaining assets, according to sources close to the deal.
Last month PNC Mortgage Corp., Vernon Hills, Ill., bought $3 billion of Midcoast's servicing portfolio. PNC paid more than $35 million, according to a source with knowledge of the deal.
Willard B. Soper 2d will remain president and chief executive of Fort Lauderdale-based Midcoast. Before joining the company he was president of J.I. Kislak Inc., Miami Lakes, Fla. Before that, he was president of Shawmut Mortgage.
Under Mr. Soper's agreement with TA Associates as recently amended, sale this year of all or most of Midcoast's assets would bring him a $160,250 bonus plus 6% of net proceeds over $15 million, according to a letter to Midcoast shareholders. In addition, he would get two years of severance pay at $325,000 a year if discharged as a result of a sale.
Midcoast will operate separately from Shorewood, Mr. Soper said, and will concentrate on servicing operations. However, Midcoast has owned no servicing since the sale to PNC Mortgage last month. Mr. Soper said Midcoast was seeking servicing portfolios and mortgage companies with servicing rights.
TA Associates tried to unload Midcoast at the end of 1994. Failing to sell the entire company to one buyer, it sold its Northeast retail production offices to Bank United of Texas in September of that year for $9 million. Thereafter Midcoast no longer originated loans.
According to people close to the deal at that time, Waterfield Mortgage Co. of Fort Wayne, Ind., made an unsuccessful offer to buy the entire company. PNC, Long Island Savings Bank, and Barnett Bank's mortgage unit also did due diligence at Midcoast, according to these sources.
Midcoast bought Sunshine Financial Corp. in April 1994. At the time, the lender was headquartered in Melville, N.Y. People close to the company said the purchase was meant to bring company operations closer to Mr. Soper's South Florida home. Even when the company was based on Long Island, Mr. Soper ran Midcoast from Florida. The Sunshine Financial purchase moved the company's base to Florida.
Venture capital firms got into the mortgage business in the late 1980s and early 1990s, when they could buy failed thrifts cheaply from the Resolution Trust Corp. Ronald O. Perelman is said to have made a large profit when he sold Troy & Nichols Inc. to Chase Manhattan Corp. in March 1993 after buying it from the RTC less than a year earlier.
For example, venture capital firm own most of Victoria Mortgage Corp. in Irvine, Calif., and Knutson Mortgage Corp. of Bloomington, Minn. And Thomas H. Lee Co. and Madison Dearborn Partners both invested in BancBoston's mortgage company spinoff, HomeSide Lending, Jacksonville, Fla.