“In our letter dated April 30, 2007, we laid out the rationale for maximizing value for PHH shareholders through continued public ownership and a business separation through a spin-off. We are disturbed by your failure to address our proposal in any substance in your preliminary proxy statement (the “Preliminary Proxy”) filed on June 18, 2007. The actions described in the Preliminary Proxy paint the picture of a seller in panic mode as bidders were dropping out and even Blackstone blinked at the eleventh hour. Importantly, the issues that caused this panic were either irrelevant (sub prime meltdown) or self-inflicted and temporary (inability to produce financial statements, failure to cut capacity heading into the declining mortgage market). It is clear that you merely sought to do the best you could in a desperation auction of the company, without giving serious consideration as to whether the company should be sold in the first place. The lack of any convincing arguments against a spin-off in the Preliminary Proxy reinforces our objection to the proposed sale. In addition, we note that PHH’s better-than-expected recent results and the recent recovery in other mortgage related stocks should enhance the returns associated with a rejection of the sale.” Pennant Capital Management, LLC is an investment advisor and currently manages over $1.6 billion in investor capital.
Originally posted on Fleet Financials