Freedom Mortgage Corporation Commences Exchange Offers and Consent Solicitations

NEW YORK, June 27, 2023 /PRNewswire/ -- Freedom Mortgage Corporation ("Freedom Mortgage") today announced that it has commenced offers to eligible holders to exchange (each an "Exchange Offer" and collectively, the "Exchange Offers") any and all of its outstanding 7.625% Senior Notes due 2026 (the "Existing Senior 2026 Notes") and 6.625% Senior Notes due 2027 (the "Existing Senior 2027 Notes" and, together with the Existing Senior 2026 Notes, the "Existing Senior Notes") for up to $509,525,000 aggregate principal amount of 7.625% Senior Notes due 2026 (the "New 7.625% Senior Notes due 2026") and up to $540,246,000 aggregate principal amount of 6.625% Senior Notes due 2027 (the "New 6.625% Senior Notes due 2027" and, together with the New 7.625% Senior Notes due 2026, the "New Senior Notes") issued by Freedom Mortgage pursuant to new indentures (collectively, the "New Senior Notes Indentures"), as set forth in the table below.

The following table sets forth the Consent Payment, the Exchange Consideration, the Early Tender Premium and the Total Exchange Consideration for each series of Existing Senior Notes:

In conjunction with the Exchange Offers, Freedom Mortgage is soliciting consents (each, a "Consent Solicitation" and, collectively, the "Consent Solicitations") to adopt certain proposed amendments to each of the indentures governing the Existing Senior Notes (the "Existing Senior Notes Indentures") in exchange for consideration consisting of cash in the form of consent payments (the "Consent Payments"). Such proposed amendments will eliminate certain of the covenants, restrictive provisions, events of default and the requirement for subsidiaries to provide guarantees in the future from the Existing Senior Notes Indentures. The consent of the holders of a majority of the aggregate principal amount of the Existing Senior Notes outstanding of a series will be required in order to effectuate the amendments to the corresponding Existing Senior Notes Indenture for that series.  Eligible holders may not deliver a consent in the Consent Solicitation without tendering Existing Senior Notes in the applicable Exchange Offer.  If an eligible holder tenders Existing Senior Notes in an Exchange Offer, such eligible holder will be deemed to deliver its consent, with respect to the principal amount of such tendered Existing Senior Notes, to the proposed amendments. 

The Exchange Offers and Consent Solicitations are being made pursuant to the terms and subject to the conditions set forth in the offering memorandum and consent solicitation statement dated June 27, 2023 (the "Offering Memorandum and Consent Solicitation Statement").

Each Exchange Offer and Consent Solicitation is conditioned upon, among other things, (1) the completion of the other Exchange Offer and Consent Solicitation and receipt of the consent of Eligible Holders representing a majority of the aggregate principal amount of each other respective series of Existing Senior Notes outstanding (the "Requisite Consents") and (2) holders of at least 65% of the aggregate principal amount of the series of the Existing Senior Notes (excluding any such Existing Senior Notes held by Freedom Mortgage and its affiliates) that are the subject of such Exchange Offer and Consent Solicitation participating in such Exchange Offer and Consent Solicitation, although Freedom Mortgage may waive such conditions at any time with respect to an Exchange Offer. Any waiver of a condition by Freedom Mortgage with respect to an Exchange Offer will automatically waive such condition with respect to the corresponding Consent Solicitation, as applicable.

Freedom Mortgage may amend, modify or terminate the Exchange Offers and may extend the Early Tender Date and the Expiration Date with respect to the Exchange Offers, subject to applicable law. Any such amendment, modification, termination or extension by Freedom Mortgage will automatically amend, modify, terminate or extend the corresponding Consent Solicitation, as applicable.

Eligible holders who validly tender (and do not validly withdraw) their Existing Senior Notes at or prior to 5:00 p.m., New York City time, on July 11, 2023, unless extended (such date and time, as the same may be extended, the "Early Tender Date") or, if the applicable supplemental indenture to the respective corresponding Existing Senior Notes Indenture implementing the applicable proposed amendments is executed later than such date, at or prior to the Consent Payment Eligibility Deadline (as defined below), will be eligible to receive, on the Settlement Date, the applicable Total Exchange Consideration, which includes the applicable Early Tender Premium and Consent Payment, each as set forth in the table above, for all such Existing Senior Notes that are accepted. To be eligible to receive the Consent Payment, eligible holders must validly tender their Existing Senior Notes at or prior to the later of (i) the Early Tender Date and (ii) 5:00 p.m., New York City time, on the date the Requisite Consents are obtained (the later of (i) and (ii), the "Consent Payment Eligibility Deadline"); provided that if the applicable supplemental indenture to the respective corresponding Existing Senior Notes Indenture implementing the applicable proposed amendments is executed at or prior to 5:00 p.m., New York City time, on July 11, 2023 (which is the Early Tender Date without giving effect to any extensions thereof), then the Consent Payment will be paid to each eligible holder that validly tenders (and does not validly withdraw) their Existing Senior Notes of the applicable series at or prior to 5:00 p.m., New York City time, on July 11, 2023, for all such Existing Senior Notes that are accepted; provided, further, that the Consent Payment will not be paid with respect to any Existing Senior Notes validly withdrawn (and not validly retendered) prior to the Consent Payment Eligibility Deadline. Eligible holders who validly tender their Existing Senior Notes after the Early Tender Date but prior to 5:00 p.m., New York City time, on July 26, 2023, unless extended (the "Expiration Date"), will not be eligible to receive the applicable Early Tender Premium, and eligible holders who validly tender their Existing Senior Notes after the Consent Payment Eligibility Deadline will not be eligible to receive the applicable Consent Payment. Accordingly, such eligible holders will be eligible to receive, on the Settlement Date, only the applicable Exchange Consideration as set forth in the table above, for all such Existing Senior Notes that are accepted. The "Settlement Date" will be promptly after the Expiration Date and is expected to be within three business days after the Expiration Date.

After the Settlement Date, Freedom Mortgage intends to effect a reorganization of its corporate structure (the "Reorganization") pursuant to which all of its equity interests will be transferred to Freedom Mortgage Holdings LLC ("Freedom Holdings"), which will become 100% owned by its sole managing member, Freedom Mortgage Parent LLC ("Freedom Parent"). Each of Freedom Holdings and Freedom Parent will be newly formed in anticipation of the Reorganization. After giving effect to the Reorganization, neither Freedom Parent nor Freedom Holdings will have any operations or assets independent of their ownership of their subsidiaries.

Following the consummation of the Reorganization, and subject to the satisfaction of certain other conditions as set forth in the Offering Memorandum and Consent Solicitation Statement, Freedom Mortgage intends to enter into certain supplemental indentures to each of the New Senior Notes Indentures whereby Freedom Holdings shall automatically and unconditionally succeed to, and be substituted for, and be subject to all of the obligations and may exercise any right and power of, Freedom Mortgage, as issuer under each of the New Senior Notes Indentures and each series of New Senior Notes. Concurrently with the substitution of Freedom Holdings as issuer under each of the New Senior Notes Indentures and each series of New Senior Notes, Freedom Mortgage and Freedom Parent shall unconditionally guarantee the New Senior Notes on a senior unsecured basis (the date the foregoing transactions are consummated, the "Issuer Substitution Date"). For the avoidance of doubt, on and after the Settlement Date, and until the Issuer Substitution Date, neither Freedom Parent or Freedom Holdings shall be subject to any of the restrictive covenants or other provisions of the New Senior Notes Indentures nor have any payment or other obligations thereunder. There can be no assurance as to the occurrence or the timing of the Issuer Substitution Date.

Documents relating to the Exchange Offers and Consent Solicitations will be distributed only to eligible holders of Existing Senior Notes who certify pursuant to an eligibility form that they are either (a) a "Qualified Institutional Buyer" as that term is defined in Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), or (b) a person that is outside the "United States" and that is not a "U.S. person," as those terms are defined in Rule 902 under the Securities Act, and are (i) "non-U.S. qualified offerees" or (ii) "non-Canadian qualified offerees" (as such terms are defined in the Offering Memorandum and Consent Solicitation Statement). The complete terms and conditions of the Exchange Offers and Consent Solicitations are described in the Offering Memorandum and Consent Solicitation Statement, a copy of which may be obtained by contacting D.F. King & Co., Inc., the exchange agent and information agent for the Exchange Offers and Consent Solicitations, at (888) 628-1041 (U.S. toll-free) or (212) 269-5550 (banks and brokers) or [email protected]. The eligibility form is available electronically at: www.dfking.com/freedommortgage. 

This press release does not constitute an offer to sell or purchase, or a solicitation of an offer to sell or purchase, or the solicitation of tenders or consents with respect to, any security. No offer, solicitation, purchase or sale will be made in any jurisdiction in which such an offer, solicitation, or sale would be unlawful. The Exchange Offers and Consent Solicitations are being made solely pursuant to the Offering Memorandum and Consent Solicitation Statement and only to such persons and in such jurisdictions as is permitted under applicable law.

The New Senior Notes have not been and will not be registered under the Securities Act or any state securities laws. Therefore, the New Senior Notes may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and any applicable state securities laws.

Cautionary Note Regarding Forward-Looking Statements
All statements other than statements of historical facts may be forward-looking statements, including, without limitation, statements regarding our financial position, business strategy and other plans and objectives for our future operations, are forward-looking statements. These statements include declarations regarding our management's beliefs and current expectations. Such statements generally include the words "may," "will," "should," "could," "intend," "consider," "expect," "plan," "anticipate," "believe," "estimate," "predict" or "continue" or the negative of such terms or other comparable terminology.  Such statements are not guarantees of future performance and involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially from expected results. As a result, you should not put undue reliance on any forward-looking statement. Among the risks and uncertainties that could cause actual results to differ materially from those described in forward-looking statements are the following: adverse developments affecting the financial services industry, such as actual events or concerns involving liquidity, defaults or non-performance by financial institutions, transactional counterparties or other companies; the global pandemic of COVID-19, caused by a novel strain of the coronavirus, and its ongoing impact on our operations and markets; changes in interest rates and their impact on the mortgage market; inability to access short-term funding facilities as a result of adverse conditions in the credit markets; inability to maintain an appropriate level of financing facilities on favorable terms and inability to be in compliance with covenants under financing facilities; decreases in residential real estate values and deterioration of mortgage loan markets and housing markets; reduction in the availability of secondary markets for our mortgage loan products; inability to maintain current servicer qualifications with investors who purchase mortgage loans that we originate; inability to continue to comply with our updated issuer risk management guidelines; inability to continue to securitize the mortgage loans we originate into multi-issuer pools; a reduction in government support of homeownership; failure to acquire technologies or technological solutions, respond to cyber-attacks or adapt to changes in technology when necessary; failure to maintain relationships with third-party vendors and other service providers; failure to retain key personnel and senior management; future litigation developments or enforcement actions; errors in management's estimates and judgment decisions in connection with matters that are inherently uncertain, such as fair value determinations given the lack of liquidity of our assets; issues concerning the soundness of financial institutions and counterparties with which we do business; inability to detect and prevent fraud during the loan origination process and maintain adequate procedures over the foreclosure process; natural disasters, pandemics or other outbreaks of infectious diseases (such as COVID-19), or other similar events, and, in each case, the effects thereof on our industry and the macro- and micro-economic environment; the volatility of the interest expense in respect of our variable rate indebtedness; the rapidly changing financial environment, economic conditions or industry characteristics that undermine the assumptions of our internal models for managing business and financial risk; inability to successfully manage expansion, fully realize the anticipated benefits and synergies of our acquisitions and to successfully complete the integration of businesses we acquire; changes in U.S. federal tax laws and their potential impact on the perceived affordability of homeownership and demand for homes; increases in government regulation and compliance with a complex body of U.S. federal, state and local laws; the conservatorship of the Federal National Mortgage Association ("Fannie Mae" or "FNMA") and the Federal Home Loan Mortgage Corporation ("Freddie Mac" or "FHLMC") and related efforts, along with any changes to these entities or the guidelines they use, or in laws and regulations affecting the relationship between Fannie Mae, Freddie Mac, the Government National Mortgage Association ("Ginnie Mae" or "GNMA") and the U.S. government, and other factors detailed in the Offering Memorandum and Consent Solicitation Statement.

These forward-looking statements speak only as of the date of this communication or as of the date they were made, and Freedom Mortgage does not undertake any obligation to update forward-looking statements. For a more detailed discussion of these factors, also see the information under the captions "Forward-Looking Statements," "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Offering Memorandum and Consent Solicitation Statement.

As for the forward-looking statements that relate to future financial results and other projections, such forward-looking statements are subject to risks and uncertainties that may cause actual results and future trends to differ materially from those matters expressed in, or implied or projected by, such forward-looking statements, which speak only as of the date of this communication or as of the day they were made. Investors are cautioned not to place undue reliance on these forward-looking statements.

About Freedom Mortgage Corporation
Freedom Mortgage is an independent mortgage company that provides mortgage loans through retail, wholesale and correspondent channels.

SOURCE Freedom Mortgage Corporation