Freedom Mortgage Corporation Announces Expiration and Final Results of Exchange Offers and Consent Solicitations

NEW YORK, July 27, 2023 /PRNewswire/ -- Freedom Mortgage Corporation ("Freedom Mortgage") today announced the expiration and final results of the previously-announced offers to exchange (each an "Exchange Offer" and collectively, the "Exchange Offers") any and all of its outstanding 7.625% Senior Notes due 2026 (the "Existing Senior 2026 Notes") and 6.625% Senior Notes due 2027 (the "Existing Senior 2027 Notes" and, together with the Existing Senior 2026 Notes, the "Existing Senior Notes") for up to $509,525,000 aggregate principal amount of 7.625% Senior Notes due 2026 (the "New 7.625% Senior Notes due 2026") and up to $540,246,000 aggregate principal amount of 6.625% Senior Notes due 2027 (the "New 6.625% Senior Notes due 2027" and, together with the New 7.625% Senior Notes due 2026, the "New Senior Notes") issued by Freedom Mortgage, as set forth in the table below, and the related consent solicitations (each, a "Consent Solicitation" and, collectively, the "Consent Solicitations") to adopt certain proposed amendments (the "Proposed Amendments") to each of the indentures governing the Existing Senior Notes (the "Existing Senior Notes Indentures") that will eliminate certain of the covenants, restrictive provisions, events of default and the requirement for subsidiaries to provide guarantees in the future from the Existing Senior Notes Indentures.

The Exchange Offers and Consent Solicitations expired at 5:00 p.m., New York City time, on July 26, 2023 (such time, the "Expiration Date"). According to information provided by D.F. King & Co., Inc. ("D.F. King"), the exchange agent and information agent for the Exchange Offers and Consent Solicitations, as of the Expiration Date, a total of $501,329,000 principal amount of Existing Senior 2026 Notes and $535,107,000 principal amount of Existing Senior 2027 Notes had been validly tendered and not validly withdrawn in the Exchange Offers, representing approximately 98.39% and 99.05%, respectively, of the outstanding Existing Senior 2026 Notes and Existing Senior 2027 Notes. The settlement date for the Exchange Offers is currently expected to occur on July 28, 2023 (the "Settlement Date"), although Freedom Mortgage may in its sole discretion choose to extend the Settlement Date to July 31, 2023.   

The following table sets forth the Consent Payment, the Exchange Consideration, the Early Tender Premium and the Total Exchange Consideration for each series of Existing Senior Notes:

The Exchange Offers and Consent Solicitations were made pursuant to the terms and subject to the conditions set forth in the offering memorandum and consent solicitation statement dated June 27, 2023 (the "Offering Memorandum"). Each Exchange Offer and Consent Solicitation was conditioned upon, among other things, (1) the completion of the other Exchange Offer and Consent Solicitation and receipt of the consent of eligible holders representing a majority of the aggregate principal amount of each other respective series of Existing Senior Notes outstanding (the "Requisite Consents") and (2) holders of at least 65% of the aggregate principal amount of the series of the Existing Senior Notes (excluding any such Existing Senior Notes held by Freedom Mortgage and its affiliates) that are the subject of such Exchange Offer and Consent Solicitation participating in such Exchange Offer and Consent Solicitation (the "Minimum Tender Condition"). As of the Expiration Date, the Requisite Consents have been received and the Minimum Tender Condition has been satisfied.

As a result of having received the Requisite Consents with respect to both the Existing Senior 2026 Notes and Existing Senior 2027 Notes as of the Early Tender Date, Freedom Mortgage and the trustee under the Existing Senior Notes Indentures entered into supplemental indentures to the Existing Senior Notes Indentures on the Early Tender Date to effect the Proposed Amendments (the "Supplemental Indentures"). The Proposed Amendments shall become operative upon the consummation of the applicable Exchange Offer on the Settlement Date.    

Available Documents and Other Details

Documents relating to the Exchange Offers and Consent Solicitations were distributed only to eligible holders of Existing Senior Notes who certified pursuant to an eligibility form that they were either (a) a "Qualified Institutional Buyer" as that term is defined in Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), or (b) a person that is outside the "United States" and that is not a "U.S. person," as those terms are defined in Rule 902 under the Securities Act, and are (i) "non-U.S. qualified offerees" or (ii) "non-Canadian qualified offerees" (as such terms are defined in the Offering Memorandum).

This press release does not constitute an offer to sell or purchase, or a solicitation of an offer to sell or purchase, or the solicitation of tenders or consents with respect to, any security. No offer, solicitation, purchase or sale will be made in any jurisdiction in which such an offer, solicitation, or sale would be unlawful. The Exchange Offers and Consent Solicitations were made solely pursuant to the Offering Memorandum and only to such persons and in such jurisdictions as were permitted under applicable law.

The New Senior Notes have not been and will not be registered under the Securities Act or any state securities laws. Therefore, the New Senior Notes may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and any applicable state securities laws.

Cautionary Note Regarding Forward-Looking Statements

All statements other than statements of historical facts may be forward-looking statements, including, without limitation, statements regarding our financial position, business strategy and other plans and objectives for our future operations, are forward-looking statements. These statements include declarations regarding our management's beliefs and current expectations. Such statements generally include the words "may," "will," "should," "could," "intend," "consider," "expect," "plan," "anticipate," "believe," "estimate," "predict" or "continue" or the negative of such terms or other comparable terminology.  Such statements are not guarantees of future performance and involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially from expected results. As a result, you should not put undue reliance on any forward-looking statement. Among the risks and uncertainties that could cause actual results to differ materially from those described in forward-looking statements are the following: adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults or non-performance by financial institutions, transactional counterparties or other companies; the global pandemic of COVID-19, caused by a novel strain of the coronavirus, and its ongoing impact on our operations and markets; changes in interest rates and their impact on the mortgage market; inability to access short-term funding facilities as a result of adverse conditions in the credit markets; inability to maintain an appropriate level of financing facilities on favorable terms and inability to be in compliance with covenants under financing facilities; decreases in residential real estate values and deterioration of mortgage loan markets and housing markets; reduction in the availability of secondary markets for our mortgage loan products; inability to maintain current servicer qualifications with investors who purchase mortgage loans that we originate; inability to continue to comply with our updated issuer risk management guidelines; inability to continue to securitize the mortgage loans we originate into multi-issuer pools; a reduction in government support of homeownership; failure to acquire technologies or technological solutions, respond to cyber-attacks or adapt to changes in technology when necessary; failure to maintain relationships with third-party vendors and other service providers; failure to retain key personnel and senior management; future litigation developments or enforcement actions; errors in management's estimates and judgment decisions in connection with matters that are inherently uncertain, such as fair value determinations given the lack of liquidity of our assets; issues concerning the soundness of financial institutions and counterparties with which we do business; inability to detect and prevent fraud during the loan origination process and maintain adequate procedures over the foreclosure process; natural disasters, pandemics or other outbreaks of infectious diseases (such as COVID-19), or other similar events, and, in each case, the effects thereof on our industry and the macro- and micro-economic environment; the volatility of the interest expense in respect of our variable rate indebtedness; the rapidly changing financial environment, economic conditions or industry characteristics that undermine the assumptions of our internal models for managing business and financial risk; inability to successfully manage expansion, fully realize the anticipated benefits and synergies of our acquisitions and to successfully complete the integration of businesses we acquire; changes in U.S. federal tax laws and their potential impact on the perceived affordability of homeownership and demand for homes; increases in government regulation and compliance with a complex body of U.S. federal, state and local laws; the conservatorship of the Federal National Mortgage Association ("Fannie Mae" or "FNMA") and the Federal Home Loan Mortgage Corporation ("Freddie Mac" or "FHLMC") and related efforts, along with any changes to these entities or the guidelines they use, or in laws and regulations affecting the relationship between Fannie Mae, Freddie Mac, the Government National Mortgage Association ("Ginnie Mae" or "GNMA") and the U.S. government, and other factors detailed in the Offering Memorandum.

These forward-looking statements speak only as of the date of this communication or as of the date they were made, and Freedom Mortgage does not undertake any obligation to update forward-looking statements. For a more detailed discussion of these factors, also see the information under the captions "Forward-Looking Statements," "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Offering Memorandum.

As for the forward-looking statements that relate to future financial results and other projections, such forward-looking statements are subject to risks and uncertainties that may cause actual results and future trends to differ materially from those matters expressed in, or implied or projected by, such forward-looking statements, which speak only as of the date of this communication or as of the day they were made. Investors are cautioned not to place undue reliance on these forward-looking statements.

About Freedom Mortgage Corporation

Freedom Mortgage is a nationwide residential mortgage loan originator and servicer.

SOURCE Freedom Mortgage Corporation