Provident Funding Associates, L.P. and PFG Finance Corp. Announce Exchange Offer and Consent Solicitation in respect of their Senior Notes

SANTA ROSA, Calif., July 18, 2024 /PRNewswire/ -- Provident Funding Associates, L.P. (the "Company") and PFG Finance Corp., a direct wholly-owned subsidiary of the Company (the "Co-Issuer," and together with the Company, the "Issuers"), today announced that they have commenced (i) an offer to exchange (the "Exchange Offer") any and all of their outstanding 6.375% Senior Notes due 2025 (the "Existing Notes") for cash and for the Issuers' new 8.375% Senior Notes due 2027 (the "New Notes") and (ii) a solicitation of consents to certain proposed amendments to the indenture governing the Existing Notes (the "Consent Solicitation"), in each case, upon the terms and subject to the conditions described in the Confidential Offering Memorandum and Consent Solicitation Statement, dated July 18, 2024 (the "Offering Memorandum"). The primary purpose of the Exchange Offer is to improve the Company's maturity profile by extending the maturity date of the indebtedness represented by the Existing Notes from June 2025 to January 2027.

The following table summarizes certain terms of the Exchange Offer:

The New Notes will mature on January 15, 2027; provided that if any Existing Notes remain outstanding on June 15, 2025, then the New Notes will also mature on June 15, 2025. The New Notes will bear interest at a rate per annum equal to 8.375%.

Prior to July 15, 2025, the New Notes will be redeemable at the Issuers' option at a make-whole price. On and after July 15, 2025, the New Notes will be redeemable at the Issuers' option at the redemption prices listed in the Offering Memorandum.

The New Notes will be the Issuers' senior obligations and any future New Note guarantee would be the senior obligation of the applicable guarantor. The New Notes and New Note guarantees, if any, will be pari passu in right of payment to all of the Issuers' and the guarantors' existing and future indebtedness that is not subordinated and senior in right of payment to all of the Issuers' and the guarantors' subordinated indebtedness. The New Notes and New Note guarantees, if any, will be effectively subordinated to all of the Issuers' and the guarantors' existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness. The New Notes and the New Note guarantees, if any, will be structurally subordinated to all existing and future liabilities, including trade payables, of each of the Issuers' existing subsidiaries and each of the Issuers' future subsidiaries that do not guarantee the New Notes. On the Early Settlement Date and the Final Settlement Date (each as defined below), there will be no guarantors. In the future, the Issuers' obligations under the New Notes may be jointly and severally and fully and unconditionally guaranteed on a senior basis by certain of their future domestic subsidiaries, other than special purpose vehicles and immaterial subsidiaries. In addition, the covenants for the New Notes will be substantially consistent with those of the Existing Notes.

The Exchange Offer and the Consent Solicitation will expire at 5:00 p.m., New York City time, on August 15, 2024, unless extended or earlier terminated (such date and time, as they may be extended, the "Expiration Date"). Eligible Holders (as defined below) must validly tender their Existing Notes at or prior to 5:00 p.m., New York City time, on July 31, 2024, unless extended (such date and time, as they may be extended, the "Early Exchange Date"), to be eligible to receive the "Total Exchange Consideration" (as set forth above), which will be payable in the forms described above and in the Offering Memorandum. Eligible Holders tendering Existing Notes after the Early Exchange Date and on or before the Expiration Date, and whose Existing Notes are accepted in the Exchange Offer, will only be eligible to receive the "Exchange Consideration" (as set forth above), which will equal the Total Exchange Consideration minus the Early Exchange Premium.

In addition to the Total Exchange Consideration or Exchange Consideration, as applicable, Eligible Holders whose Existing Notes are accepted for exchange will receive the accrued and unpaid interest in cash, if any, to, but not including, the early settlement date, which we expect will be on or around August 5, 2024, unless extended (the "Early Settlement Date") or the final settlement date, which we expect will be promptly following and within three business days of the Expiration Date, unless extended (the "Final Settlement Date"), as applicable, for such Existing Notes that are validly tendered and accepted. Interest on the New Notes will accrue from (and including) the Early Settlement Date. If New Notes are issued in exchange for Existing Notes on the Final Settlement Date, such New Notes will have an embedded entitlement to pre-issuance interest for the period from (and including) the Early Settlement Date to but excluding the Final Settlement Date (in order to preserve fungibility with New Notes issued on the Early Settlement Date). As a result, the cash payable for accrued interest on any Existing Notes exchanged on the Final Settlement Date will be reduced by the amount of any pre-issuance interest on the New Notes exchanged therefor.

On the Early Settlement Date and the Final Settlement Date, we will deposit with the Exchange Agent (as defined below) an amount of cash sufficient to pay any cash amounts then due to exchanging Eligible Holders (including the cash portion of the Total Exchange Consideration, and any accrued interest on Existing Notes validly tendered and accepted for exchange), and the New Notes will be issued in exchange for any Existing Notes tendered for exchange and accepted by us at the Early Settlement Date or the Final Settlement Date in the amount and manner described in the Offering Memorandum.

In conjunction with the Exchange Offer, the Issuers are soliciting consents (the "Consents") from Eligible Holders of Existing Notes to certain proposed amendments (the "Proposed Amendments") to the indenture, dated as of June 8, 2017 (as amended, supplemented or otherwise modified prior to the date of the Offering Memorandum, the "Existing Notes Indenture"), by and among the Issuers, the guarantors party thereto from time to time and Computershare Trust Company, National Association (as successor in interest to Wells Fargo Bank, National Association), as trustee, governing the Existing Notes. If Consents are received from holders of at least 50.1% of the outstanding principal amount of Existing Notes that are not affiliates of the Issuer, the Proposed Amendments will eliminate substantially all of the restrictive covenants contained in the Existing Notes Indenture and the Existing Notes, eliminate certain events of default, modify covenants regarding mergers and consolidations and modify or eliminate certain other provisions, including certain provisions relating to future guarantors, contained in the Existing Notes Indenture and the Existing Notes. The completion of the Exchange Offer is not conditioned on any minimum amount of Existing Notes being tendered or the completion of the Consent Solicitation.

Tenders of Existing Notes may be validly withdrawn and Consents may be revoked at any time at or prior to 5:00 p.m., New York City time, on July 31, 2024 (as it may be extended, the "Withdrawal Deadline"), but will thereafter be irrevocable, except in certain limited circumstances where additional withdrawal rights are required by law. Subject to applicable law, the Issuers may extend the Early Exchange Date or Expiration Date, with or without extending the Withdrawal Deadline. Tenders submitted in the Exchange Offer after the Withdrawal Deadline will be irrevocable except in the limited circumstances where additional withdrawal rights are required by law.

Holders may not tender their Existing Notes pursuant to the Exchange Offer without delivering a Consent with respect to such Existing Notes pursuant to the Consent Solicitation, and holders may not deliver their Consents pursuant to the Consent Solicitation without tendering the related Existing Notes pursuant to the Exchange Offer. If holders tender their Existing Notes pursuant to the Exchange Offer, they will be deemed to have given their Consent to the Proposed Amendments pursuant to the Consent Solicitation.

The Issuers may terminate the Exchange Offer and the Consent Solicitation if the conditions specified in the Offering Memorandum are not satisfied. Consummation of the Exchange Offer and the Consent Solicitation is subject to the satisfaction or waiver of certain conditions set forth in the Offering Memorandum. In the event of a termination, the Exchange Offer will not be consummated, the Proposed Amendments will not become effective, no Total Exchange Consideration or Exchange Consideration will be paid, and the Existing Notes tendered pursuant to the Exchange Offer will be promptly returned to the tendering holders. The Exchange Offer is not conditioned on any minimum amount of Existing Notes being tendered for exchange or the completion of the Consent Solicitation.

The Issuers reserves the right to extend, amend or terminate the Exchange Offer and the Consent Solicitation for any reason or for no reason at any time prior to the Expiration Date. The Issuers will not receive any cash proceeds from the Exchange Offer.

The Exchange Offer is being made only to holders of Existing Notes that have certified, by submitting an instruction to the clearing system, that they are either (i) reasonably believed to be "qualified institutional buyers" as defined in Rule 144A ("Rule 144A") under the Securities Act of 1933, as amended (the "Securities Act"), or (ii) are located outside the United States and are not "U.S. persons" as defined in Rule 902 under the Securities Act (such holders, "Eligible Holders"). Only Eligible Holders are authorized to receive or review the Offering Memorandum or to participate in the Exchange Offer. Non U.S.-persons may also be subject to additional eligibility criteria.

Information Relating to the Exchange Offer and the Consent Solicitation

The complete terms and conditions of the Exchange Offer and the Consent Solicitation are set forth in the Offering Memorandum. The Offering Memorandum contains important information, and Eligible Holders are encouraged to read it in its entirety. The Offering Memorandum will only be distributed to Eligible Holders who complete and return an eligibility form confirming that they are either a "qualified institutional buyer" under Rule 144A or not a "U.S. person" under Regulation S under the Securities Act for purposes of applicable securities laws.

Holders of Existing Notes who desire to complete an eligibility form should either visit www.dfking.com/provident or request instructions by sending an e-mail to [email protected] or by calling D.F. King & Co., Inc., the information (the "Information Agent") and exchange agent (the "Exchange Agent") for the Exchange Offer, at (toll-free) (800) 769-7666 (toll-free) or (banks and brokers) (212) 269-5550.

None of the Issuers, their affiliates, their respective boards of directors and stockholders, the dealer manager for the Exchange Offer, the Information Agent, Exchange Agent or Computershare Trust Company, National Association, as trustee for the Existing Notes and New Notes, are making any recommendation as to whether holders should tender any Existing Notes in response to the Exchange Offer and the Consent Solicitation. Holders must make their own decision as to whether to tender any of their Existing Notes, and, if so, the principal amount of Existing Notes to tender.

This press release is for informational purposes only and is neither an offer to buy nor a solicitation of an offer to sell any of the Existing Notes, the New Notes or any other securities. The Exchange Offer and the Consent Solicitation are not being made to holders of Existing Notes in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. The Exchange Offer and the Consent Solicitation are only being made pursuant to the Offering Memorandum. Eligible Holders are strongly encouraged to read the Offering Memorandum carefully because it will contain important information.

The New Notes have not been and will not be registered under the Securities Act or any other applicable securities laws and may not be offered or sold in the United States or to or for the account of any U.S. person absent registration or an applicable exemption from the registration requirements. Non U.S.-persons may also be subject to additional eligibility criteria. The New Notes have not been approved or disapproved by any regulatory authority, nor has any such authority passed upon the accuracy or adequacy of the Offering Memorandum.

Forward-Looking Statements

This release contains statements that constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act. Many of the forward-looking statements contained in this release can be identified by the use of forward-looking words such as "anticipate," "believe," "could," "expect," "should," "plan," "intend," "estimate" and "potential," among others. The forward-looking statements are based upon management's views and assumptions as of the date of this Offering Memorandum regarding future events and operating performance and are applicable only as of the dates of such statements. By their nature, all forward-looking statements involve risk and uncertainties including as it relates to our ability to predict our future operating and financial performance. Actual results may differ materially from those contemplated by the forward-looking statements for a number of reasons, including, but not limited to, those addressed in "Risk Factors" and "Statements Regarding Forward-Looking Information" sections of the Offering Memorandum. You should not place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them publicly or to revise them in light of new information or future events.

About the Issuers

The Company is a California limited partnership and a leading private, independent mortgage company that originates and services residential mortgage loans. The Co-Issuer was formed on March 15, 2010, as a California corporation, to act as co-issuer of the Company's debt securities.

Investor Contacts:

Christopher Austin
Controller, SVP
(650) 259-7413

SOURCE Provident Funding Associates, L.P.

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