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Blackstone Encounters $750 Million Shortfall in Funding PHH Mortgage Acquisition

September 25, 2007

NEW YORK – Blackstone Group LP, which agreed to acquire PHH Mortgage from General Electric Corp., following its pending acquisition of PHH Corp., reported that it faces a shortfall of up to $750 million in debt financing, according to Reuters.

Blackstone said it will continue its efforts to obtain financing, but it is not optimistic, reported Reuters.

Mount Laurel, N.J.-based PHH Corp., which is the parent company of PHH Arval and PHH Mortgage, said it expects GE to fulfill its obligation under the merger agreement, which was signed in March. However, in a statement, GE spokesman Stephen White said: “GE continues to hope that Blackstone will succeed in arranging its financing so the merger can be completed. But if Blackstone is unable to complete its purchase, GE will not be obligated to complete the merger.”

The all-cash transaction is valued at more than $1.8 billion. After the acquisition, GE will sell PHH Mortgage to a Blackstone affiliate and retain PHH Arval, the fleet management company.
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