In the Matter of PHH Corporation, 2018 CanLII 98283

Ontario Commission des 22nd Floor 22e étage

Securities valeurs mobilières 20 Queen Street West 20, rue queen ouest

Commission de l’Ontario Toronto ON M5H 3S8 Toronto ON M5H 3S8

October 5, 2018

In the Matter of

the Securities Act,

R.S.O 1990, c. S.5, as amended

(the Act)

and

In the Matter of

PHH Corporation

(the Filer)

Background

The Ontario Securities Commission has received an application from the Filer for an order pursuant to subparagraph 1(10)(a)(ii) of the Act that the Filer is no longer a reporting issuer (the Order Sought).

Interpretation

Terms defined in National Instrument 14-101 Definitions have the same meaning if used in this order, unless otherwise defined.

Representations

This order is based on the following facts represented by the Filer:

The Filer was formed under the laws of Maryland and its head office is located at 3000 Leadenhall Road, Mt. Laurel, New Jersey, USA, 08054.
The Filer is a reporting issuer under the laws of Ontario alone and is not a reporting issuer in any other jurisdiction of Canada.
Prior to the effectiveness of the de-registration of the Filer’s issued and outstanding shares of common stock (the Common Stock) with the U.S. Securities and Exchange Commission (the SEC), the Filer is also subject to reporting requirements under U.S. securities laws as a registrant under the United States Securities Exchange Act of 1934, as amended (the Exchange Act).
Prior to the effective date of the Merger (as defined herein), there were 32,581,485 issued and outstanding shares of Common Stock which were listed on the New York Stock Exchange (NYSE).
At a special meeting of stockholders of the Filer held on June 11, 2018, requisite stockholder approval was received in connection with the merger (the Merger) of POMS Corp (Merger Sub), a wholly-owned subsidiary of Ocwen Financial Corporation (Ocwen), a registrant under the Exchange Act that is listed on the NYSE, with and into the Filer, with the Filer surviving the merger and becoming a wholly-owned subsidiary of Ocwen pursuant to the terms and conditions of the Agreement and Plan of Merger (the Merger Agreement) dated February 27, 2018, by and among Ocwen, Merger Sub and the Filer. The holders of Notes (as defined below) were not required to vote in respect of the Merger. The Merger closed on October 4, 2018.
Pursuant to the Merger Agreement, at closing of the Merger, each share of Common Stock issued and outstanding immediately prior to the closing of the Merger (other than shares that are held in the treasury of the Filer or owned by Ocwen or Merger Sub (subject to certain exceptions)) was converted into the right to receive US$11.00 in cash, without interest. Upon closing of the Merger, each outstanding option, time-based restricted stock unit and performance-based restricted stock unit vested and was cancelled in exchange for the right of the holder thereof to receive the merger consideration (or, in the case of options, the excess, if any, of the merger consideration over the exercise price) in respect of each share of Filer’s common stock subject to such award (in the case of performance-based restricted stock units, if any shares of Filer’s common stock were earned under such award based on the actual performance of the Filer through immediately prior to the Merger).
Immediately following closing of the Merger and as at the date hereof, the Filer only has the following two classes of securities outstanding (excluding any securities owned by Ocwen):

(a) US$97.521 million aggregate principal amount of 7.375% Senior Notes due 2019 (the 2019 Notes). The 2019 Notes were issued pursuant to an indenture dated as of January 17, 2012, between the Filer and The Bank of New York Mellon Trust Company, N.A., as trustee (the Trust Indenture), as supplemented by the second supplemental indenture dated as of August 23, 2012 between the Filer and The Bank of New York Mellon Trust Company, N.A. (BNY), and the fourth supplemental indenture, dated as of July 3, 2017 between the Filer and BNY(collectively, the 2019 Notes Indenture); and

(b) US$21.543 million aggregate principal amount of 6.375% Senior Notes due 2021 (the 2021 Notes, and together with the 2019 Notes, the Notes). The 2021 Notes were issued pursuant to the Indenture, as supplemented by the third supplemental indenture dated as of August 20, 2013 between the Filer and BNY, and the fifth supplemental indenture, dated as of July 3, 2017 between the Filer and BNY (the 2021 Notes Indenture, and collectively with the 2019 Notes Indenture, the Notes Indenture).

The Notes are not convertible or exchangeable into any other securities of the Filer.
The Notes were sold to investors in the United States pursuant to a registered offering under U.S. securities laws, and a small portion of the Notes were sold to “accredited investors” in Canada as defined in section 1.1 of National Instrument 45-106 Prospectus Exemptions pursuant to available prospectus exemptions.
The Notes have never been listed for trading on any stock exchange or other marketplace (as that term is defined in National Instrument 21-101 Marketplace Operation (NI 21-101)).
The Notes are issued in book-entry form and are represented by global certificates registered in a nominee name of The Depository Trust Company (DTC), with beneficial interests therein recorded in records maintained by DTC and its participants as financial intermediaries that hold securities on behalf of their clients. In accordance with industry practice and custom, the Filer has obtained from Broadridge Financial Solutions Inc. geographic surveys of beneficial holders of Notes as of June 4, 2018 (collectively, the Geographic Report), which provides information as to the number of Noteholders and aggregate principal amount of Notes held in Canada, the United States and elsewhere.
The Geographic Report covers approximately 100% of the outstanding US$97.521 million principal amount of the 2019 Notes and reports a total of 218 holders of the 2019 Notes residing in the following jurisdictions:

(a) 3 in Ontario holding 6.96% of the principal amount of the 2019 Notes;

(b) 204 in the United States holding 76.06% of the principal amount of the 2019 Notes; and

(c) 11 in jurisdictions outside of Canada and the United States holding 16.98% of the principal amount of the 2019 Notes.

The Geographic Report covers approximately 100% of the outstanding US$21.543 million principal amount of the 2021 Notes and reports a total of 543 holders of the 2021 Notes residing in the following jurisdictions:

(a) 1 in Québec holding 2.00% of the principal amount of the 2021 Notes;

(b) 1 in British Columbia holding 0.01% of the principal amount of the 2021 Notes;

(d) 39 in jurisdictions outside of Canada and the United States holding 21.41% of the principal amount of the 2021 Notes.

The Filer is an "SEC foreign issuer" within the meaning of National Instrument 71-102 Continuous Disclosure and Other Exemptions Relating to Foreign Issuers and, pursuant to that instrument and other accommodations available to foreign reporting issuers under Ontario securities law, generally satisfies its continuous disclosure requirements under Ontario securities law through compliance with corresponding reporting obligations under U.S. federal securities law, filing its U.S. disclosure documents with Canadian regulators, and sending to its Canadian shareholders the same materials it sends to U.S. shareholders.
On the closing date of the Merger and within approximately 10 calendar days thereafter, the Filer made or will make certain filings with the SEC to terminate the Filer’s reporting obligations with respect to the Common Stock and the Notes pursuant to the Exchange Act and de-list the Common Stock from the NYSE.
There is no obligation or covenant in the Notes Indenture for the Filer to maintain its status as a reporting issuer or the equivalent in Ontario, nor does the Notes Indenture contain any provision requiring ongoing reporting to holders of Notes or to the trustees for the Notes once the Filer is no longer subject to reporting requirements under applicable securities law.
The Filer is not eligible to use the simplified procedure under OSC Staff Notice 12-703 Applications for a Decision that an Issuer is not a Reporting Issuer, as the Notes are beneficially owned, directly or indirectly, by more than 51 securityholders in total worldwide.
The Filer is not an OTC reporting issuer under Multilateral Instrument 51-105 Issuers Quoted in the U.S. Over-the Counter Markets.
No securities of the Filer, including debt securities, are traded in Canada or another country on a marketplace (as that term is defined in National Instrument 21-101 Marketplace Operation) or any other facility for bringing together buyers and sellers or securities where trading data is publicly reported.
The Filer is not in default of securities legislation in any jurisdiction where it is a reporting issuer.
In the 12 months before applying for the Order Sought, the Filer has not taken any steps that indicate there is a market for its securities in Canada.
The Filer issued a news release on July 24, 2018 specifying that the Filer had applied for the Order Sought.
The Filer has no current intention to distribute any securities to the public in Canada, nor to seek financing by way of a public offering or private offering or private placement of its securities in Canada.
Upon the grant of the Order Sought, the Filer will no longer be a reporting issuer in any jurisdiction in Canada.

Order

The Commission is satisfied that the order meets the test set out in the Act for the Commission to make the order.

The order of the Commission under the Act is that the Order Sought is granted.

“William Furlong” “Laurence P. Haber”

Commissioner

Ontario Securities Commission