[October 18, 2017] |
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Radian Improves Financial Flexibility, Strengthens Capital Structure and Provides Update on Restructuring of Services Business
Radian (News - Alert) Group Inc. (NYSE: RDN) today provided an update on three
strategic actions designed to strengthen the company's financial
position, improve its debt maturity profile, grow sustainable revenues
and profitability in its Mortgage and Real Estate Services business, and
increase stockholder value. These three actions are outlined below:
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On October 16, 2017, Radian entered into a three-year, $225 million
unsecured revolving credit facility with a panel of banks led by Royal
Bank of Canada and U.S. Bank. Borrowings under the credit facility may
be used for working capital and general corporate purposes, including,
without limitation, capital contributions to Radian's insurance and
reinsurance subsidiaries as well as growth initiatives. Terms of the
credit facility include an option to increase the capacity during the
term of the agreement, up to a total of $300 million.
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On September 26, 2017, Radian completed its public offering of $450
million principal amount of 4.500% Senior Notes due 2024, and
announced the early tender results and upsizing of its tender offers
to purchase for cash a portion of its 5.500% Senior Notes due 2019,
its 5.250% Senior Notes due 2020, and its 7.000% Senior Notes due
2021. These transactions will reduce the company's annual cash
interest by approximately $4.3 million and extend the weighted average
maturity of its outstanding debt by nearly two years. The company has
no material debt maturities prior to June 2019.
Radian Chief Financial Officer Frank Hall commented, "The combination of
our successful notes offering, tender offer and credit facility
substantially increases Radian's financial flexibility while decreasing
our cost of debt over the long term. We believe the strong participation
in our notes offering and the successful execution of our credit
facility reflects the market's appreciation for Radian's financial
strength and earnings growth."
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On August 1, 2017, the company announced that, based on the recent
underperformance below expectations for its Services segment, it was
undertaking a strategic review and planned restructuring of this
business. The objective for the restructuring is to reposition the
segment for sustained profitability by focusing on the core products
and services that Radian believes have higher growth potential,
produce more predictable and recurring fee-based revenues, and better
align with customer needs. The company has committed to a
restructuring plan and currently expects to incur pretax charges of
approximately $12 million in the third quarter of 2017, including
approximately $5 million in cash. Additional pretax charges of
approximately $8 million, including approximately $7 million in cash,
are xpected to be recognized within the next 12 months. The total
charges of approximately $20 million are expected to consist of
approximately $8 million in asset impairments, approximately $7
million in employee severance and benefit costs, approximately $3
million in facility and lease termination costs, and approximately $2
million in contract termination and other restructuring costs. As part
of the restructuring plan, Radian has eliminated the position of
president of the Services business. As a result, Jeff Tennyson will
step down from the role effective immediately. Through November 11,
2017, Tennyson will assist with the Services segment management
transition.
"We are committed to transforming Radian into an even more cohesive and
profitable company. Our actions demonstrate strategies that are designed
to establish a solid foundation for broader reach and growth," said
Radian Chief Executive Officer Rick Thornberry. "The restructuring of
our Services business has required us to make difficult decisions
related to our team, and we do not take these decisions lightly. I am
personally thankful for the contributions of Jeff Tennyson, and all who
helped build and shape our companies. As we look to the future, we
expect our restructuring plan to re-position our Services business for
profitability and make our entire company stronger."
ABOUT RADIAN
Radian Group Inc. (NYSE: RDN), headquartered in Philadelphia, provides
private mortgage insurance, risk management products and real estate
services to financial institutions. Radian offers products and services
through two business segments:
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Mortgage Insurance, through its principal mortgage insurance
subsidiary Radian Guaranty Inc. This private mortgage insurance helps
protect lenders from default-related losses, facilitates the sale of
low-downpayment mortgages in the secondary market and enables
homebuyers to purchase homes more quickly with downpayments less than
20%.
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Mortgage and Real Estate Services, through its principal
services subsidiary Clayton, as well as Green River Capital, Red Bell
Real Estate and ValuAmerica. These solutions include information and
services that financial institutions, investors and government
entities use to evaluate, acquire, securitize, service and monitor
loans and asset-backed securities.
Additional information may be found at www.radian.biz.
FORWARD-LOOKING STATEMENTS
All statements in this press release that address events, developments
or results that we expect or anticipate may occur in the future are
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, Section 21E of the Exchange Act and the U.S.
Private Securities Litigation Reform Act of 1995. In most cases,
forward-looking statements may be identified by words such as
"anticipate," "may," "will," "could," "should," "would," "expect,"
"intend," "plan," "goal," "contemplate," "believe," "estimate,"
"predict," "project," "potential," "continue," "seek," "strategy,"
"future," "likely" or the negative or other variations on these words
and other similar expressions. These statements, which may include,
without limitation, projections regarding our future performance and
financial condition, are made on the basis of management's current views
and assumptions with respect to future events. Any forward-looking
statement is not a guarantee of future performance and actual results
could differ materially from those contained in the forward-looking
statement. These statements speak only as of the date they were made,
and we undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise. We operate in a changing environment where new risks emerge
from time to time and it is not possible for us to predict all risks
that may affect us. The forward-looking statements, as well as our
prospects as a whole, are subject to risks and uncertainties that could
cause actual results to differ materially from those set forth in the
forward-looking statements. These risks and uncertainties include,
without limitation: the Company's ability to successfully implement the
restructuring plan as currently anticipated; restructuring charges being
different from those estimated, including changes in the size and
components of the expected costs and charges associated with the
restructuring as well as unanticipated charges not currently
contemplated that may occur as a result of the restructuring; changes in
the planned timing of the restructuring, including the timing of plans
for implementing the reductions in workforce; and disruption in our
business associated with the restructuring plan and related activities.
View source version on businesswire.com: http://www.businesswire.com/news/home/20171018005383/en/
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