ContiFinancial Corporation To Acquire a 24% Equity Interest In Empire Funding Holding Corporation.NEW YORK--(BUSINESS WIRE)--November 3, 1997--ContiFinancial Corporation (NYSE NYSE See: New York Stock Exchange :CFN CFN Center for Functional Nanomaterials CFN Companhia Ferroviaria do Nordeste (Brazil) CFN Commercial Fueling Network CFN Conselho Federal de Nutricionistas (Brazil) ) announced today that it has entered into a definitive agreement to acquire a 24% equity interest in Empire Funding Holding Corporation ("EFHC EFHC Environmental and Facilities - Humidity Controls ") with an option to acquire additional shares of EFHC at a later date. EFHC, a newly formed entity will own 100% of Empire Funding Corp. ("Empire" or "the Company"). ContiFinancial's parent, Continental Grain Company, currently owns a 25% warrant for equity in Empire which will be exercised and exchanged, for a 25% equity interest in EFHC, upon the closing of the ContiFinancial transaction. Headquartered in Austin, Texas, Empire is a privately-held lender specializing in originating, servicing and securitizing high loan-to-value (HLTV HLTV High Loan to Value HLTV Half-Life Television HLTV Half Life True Voice ) loans, primarily for the purposes of home improvement and debt consolidation, and F.H.A. Title I home improvement loans, generally secured by junior liens on one-to-four family residential properties. As one of the largest securitizers in this sector of the mortgage market, Empire employs 518 people and is currently licensed or registered as a mortgage lender in 40 states. The Company originates loans through its 18 branch offices located nationwide and 680 direct correspondent and broker relationships. For the nine months ended September 30, 1997, Empire originated $837 million of loans, of which $486 million have been securitized securitized Of, related to, or being debt securities that are secured with assets. For example, mortgage purchase bonds are secured by mortgages that have been purchased with the bond issue's proceeds. ; and serviced a loan portfolio of $1.27 billion as of September 30. This loan portfolio consisted of 72,607 loans with an average principal balance of $17,434. On October 23, the Company closed its fifth securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. this year, for $300 million, bringing its aggregate securitization volume year-to-date to $786 million. Empire was acquired in 1991 by James N. Isaacs. Mr. Isaacs will retain ownership of 51% of EFHC's stock subsequent to ContiFinancial's initial investment and will serve as Chairman and Chief Executive Officer. The acquisition is expected to close by calendar year-end subject to requisite state licensing, federal approvals and fulfillment of other closing conditions. An up-front cash payment of $30 million will be made at closing for the initial 24% equity interest. Should ContiFinancial exercise its option to acquire additional shares, a deferred payment, based on the financial performance of EFHC, will be made depending upon whether and when ContiFinancial's option is exercised. James E. Moore, President and Chief Executive Officer of ContiFinancial, said, "Empire Funding Holding Corporation represents a further diversification for ContiFinancial into a mortgage product other than home equity loans. We believe there are significant potential synergies between Empire's well-established nationwide origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real and servicing platform and ContiFinancial's retail and wholesale home equity loan subsidiaries. Since 1993, ContiFinancial and its affiliates have had a strategic alliance relationship with Empire, currently providing a $100 million warehouse line and a $24 million residual financing facility. In addition, pursuant to this agreement ContiFinancial will make available a $10 million subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". facility. ContiFinancial has been very pleased with this long-term strategic relationship. Our equity investment enhances Empire's ability to continue its solid record of growth." Mr. Isaacs commented, "Empire has aligned itself with an industry leader. As a result of ContiFinancial's equity investment, we expect to enjoy increased loan origination The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. volume. We are excited about the opportunities that this investment provides to the Company and its employees." Scott M. Mannes, Executive Vice President of ContiFinancial, added, "This equity investment is an acknowledgment acknowledgment, in law, formal declaration or admission by a person who executed an instrument (e.g., a will or a deed) that the instrument is his. The acknowledgment is made before a court, a notary public, or any other authorized person. of Empire's success and the faith ContiFinancial has in Jim Isaacs and the management team of Empire." ContiFinancial is a consumer and commercial finance company with headquarters in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. . The Company, through ContiMortgage Corporation and other subsidiaries, is a leading originator Originator A bank, savings and loan, or mortgage banker that initially made a mortgage loan that is part of a pool. Also, an investment bank that has worked with the issuer of a new securities offering from the beginning and is usually appointed manager of the underwriting , purchaser, securitizer and servicer of home equity loans made to borrowers whose borrowing needs may not be met by traditional financial institutions. In addition, through ContiTrade Services L.L.C., the Company provides financing and securitization services and, through ContiFinancial Services Corporation, bond placement services, to originators of a broad range of loans, leases and receivables, including loans for a variety of commercial real estate property types; home equity loans; home improvement loans; prime, sub-prime and non-prime auto loans; franchisee loans; time-share loans and equipment leases. -0- Certain statements contained in this press release, which are not historical fact, may be deemed to be forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. under the federal securities laws. There are many important factors that could cause ContiFinancial Corporation's and Empire Funding Holding Corporation's actual results to differ materially from those indicated in the forward-looking statements. Such factors include, but are not limited to, general economic conditions, interest rate risk, prepayment speeds Prepayment speed Also called speed, the estimated rate at which mortgagors pay off their loans ahead of schedule, critical in assessing the value of mortgage pass-through securities. , delinquency delinquency Criminal behaviour carried out by a juvenile. Young males make up the bulk of the delinquent population (about 80% in the U.S.) in all countries in which the behaviour is reported. and default rates, changes (legislative and otherwise) in the asset securitization industry, the net interest margin securities market, demand for ContiFinancial Corporation's and Empire Funding Holding Corporation's services, the impact of certain covenants in loan agreements of ContiFinancial Corporation and Continental Grain Company, the degree to which ContiFinancial Corporation is leveraged, its needs for financing, and other risks identified in ContiFinancial Corporation's Securities and Exchange Commission filings. CONTACT: ContiFinancial Corporation Jerome M. Perelson Senior Vice President 212/207-5402 212/704-8239/8292 -OR- Edelman Financial Joseph Kist/Kerry O'Brien 212/704-8239 212/704-8292 |
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