H&R Block, a financial services company, has signed a definitive agreement to sell the mortgage loan servicing business of its Option One Mortgage Corporation subsidiary to an entity sponsored by WL Ross, a private equity firm.
The sale is subject to the satisfaction of specified conditions, including a financing contingency limiting the WL Ross’s (buyer) obligations.
Under the purchase agreement, the buyer will acquire all of the assets and certain liabilities related to Option One Mortgage Corporation’s (OOMC) servicing business, including the assets of OOMC’s call center subsidiary in India.
Under the terms, both parties will be freed from any obligations if the transaction does not close by May 30, 2008 (breakup date). However, the buyer will be obligated to pay a reverse breakup fee to Block if the transaction fails to close prior to the breakup date due to buyer’s inability to satisfy the financing condition to its obligations.
The purchase price at the closing will be based on a formula to be applied to the closing date balance sheet of the servicing business.