Radian Improves Financial Flexibility, Strengthens Capital Structure and Provides Update on Restructuring of Services Business
October 18 2017 - 6:30AM
Business Wire
-- Improves financial flexibility with $225
million unsecured revolving credit facility --
-- Strengthens capital structure, improving
debt maturity profile and reducing cash interest payments --
-- Completes strategic review of Services
segment, repositioning segment for sustained profitability --
Radian 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:
- 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.
- 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.”
- 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 expected
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:
- 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%.
- 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.
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version on businesswire.com: http://www.businesswire.com/news/home/20171018005383/en/
Radian Group Inc.Emily Riley,
215-231-1035emily.riley@radian.biz
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