|6 Months Ended|
Jun. 30, 2018
|Subsequent Events [Abstract]|
These financial statements include a discussion of material events that have occurred subsequent to June 30, 2018 (referred to as “subsequent events”) through the issuance of these condensed consolidated financial statements. Events subsequent to that date have not been considered in these financial statements.
On November 29, 2017, the Shellpoint Purchaser, a Delaware limited liability company and a wholly owned subsidiary of New Residential, entered into the Original SPA with Shellpoint, the sellers party thereto (the “Sellers”) and Shellpoint Services LLC, a Delaware limited liability company, as the representative of the Sellers. On July 3, 2018, the Shellpoint Purchaser entered into the Amendment, which modified the terms of the Original SPA to, among other things, (i) replace Shellpoint Services LLC with Shellpoint Representative LLC as representative of the Sellers, (ii) eliminate the requirement that certain indebtedness of Shellpoint be repaid at or prior to the completion of the Acquisition (as defined below), (iii) provide for the payment to the Sellers following the completion of the Acquisition of certain settlement payments that may be received by Shellpoint and (iv) modify certain provisions relating to amounts to be held back by NRM Acquisition in respect of potential post-closing indemnification claims.
Pursuant to the Shellpoint SPA, on July 3, 2018, Shellpoint Purchaser purchased all of the outstanding equity interests of Shellpoint (the “Shellpoint Acquisition”) for a purchase price of approximately $212.0 million based on the tangible book value of Shellpoint, subject to certain customary closing and post-closing adjustments. As additional consideration for the Shellpoint Acquisition, the Shellpoint Purchaser will make up to three cash earnout payments, which will be calculated following each of the first three anniversaries of the Shellpoint Closing as a percentage of the amount by which the pre-tax income of certain of Shellpoint’s businesses exceeds certain specified thresholds, up to an aggregate maximum amount of $60.0 million (the “Shellpoint Earnout Payments”), and allocated approximately 92% to the sellers and approximately 8% to a long-term employee incentive plan of Shellpoint. In connection with the Shellpoint Acquisition, New Residential also entered into a guaranty in favor of the sellers in respect of all of the Shellpoint Purchaser’s payment obligations under the Shellpoint SPA. Shellpoint is a vertically integrated mortgage platform with operations across mortgage origination and servicing, and is an approved Fannie Mae and Freddie Mac seller and servicer and a Ginnie Mae issuer.
The Shellpoint SPA contains certain customary representations and warranties made by each party, which are qualified by the confidential disclosures provided to the Shellpoint Purchaser in connection with the Shellpoint SPA. The Shellpoint SPA also contains certain indemnification provisions. A portion of the closing purchase price has been held back by the Shellpoint Purchaser, which holdback amount, together with a right of offset against the Shellpoint Earnout Payments, is available to the Shellpoint Purchaser to satisfy certain indemnification claims.
The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business.
Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef