Just nine months ago, Stearns Lending was very much in growth mode, acquiring an equity interest in Citywide Home Loans, rolling out new loan programs and acquiring other new lending channels. But the tide appears to have turned as Stearns is now facing Chapter 11 bankruptcy.
Stearns Holdings, the parent company of Stearns Lending, announced Tuesday that it is launching a “comprehensive financial restructuring plan” that will see the company reorganized through Chapter 11 bankruptcy.
According to the company, the plan is being conducted in agreement and coordination with Blackstone, the private equity giant that acquired a majority stake in Stearns Holdings back in 2015.
In that original deal, Blackstone was to provide Stearns, a national mortgage lender with wholesale, retail, correspondent and strategic alliance business channels, with the “necessary resources to accelerate its growth and fuel its efforts to capture even greater market share.”
At the time, Stearns' then-CEO Brian Hale was thrilled about the backing Blackstone brought to the table.
“What we see, from sitting in my chair, and I’m ecstatic about the announcement, is that we now have a partner that has exceptional access to the capital markets as a true partner in the business,” Hale told HousingWire in 2015.
“Blackstone as a partner, and as a key stockholder, brings with it immense corporate finance expertise,” Hale said. “Their industry-leading profile, along with [Blackstone Managing Director Nadim El Gabbani] and his team, blew us away with the depth of the homework they had done. They have exceptional knowledge of the industry. And we just believed that as partners it was a 1+1=28 kind of opportunity for both organizations.”
But now, four years later, Stearns is headed for bankruptcy, but Blackstone is still going to support the company.
In fact, as part of the financial restructuring, Blackstone is now set to acquire “substantially all of the ownership” of Stearns in exchange for agreeing to serve as plan sponsor and contributing “substantial new capital” to Stearns.
According to Stearns, the restructuring plan is “expected to significantly reduce the company’s outstanding debt, continue Stearns’ operations and preserve the jobs of its employees, and better position the company for long-term success.” Read more