Magazine article American Banker

Pipeline

Magazine article American Banker

Pipeline

Article excerpt

Byline: Allison Bisbey Colter

New Alloy

Hanover Capital Mortgage Holdings Inc., a struggling real estate investment trust, is merging with JWH Holding Co. LLC, a unit of Walter Industries Inc., a producer of metallurgical coal for the steel industry.

It may sound like an odd match, but housing was Walter Industries' original business. The builder Jim Walter Homes was founded in 1946 and a mortgage arm was created in 1958. The parent company did not acquire any industrial businesses until the 1960s. Today the builder and Walter Mortgage Co. are housed under JWH.

Before the merger, JWH plans to sell "or otherwise separate" the home builder. Walter Industries, based in Tampa, would then spin off JWH to its shareholders. The merger with Hanover is to occur immediately after the spinoff, and the combined company would continue to operate as a publicly traded REIT.

All of this is expected to be completed by early next year. The new company would be named Walter Investment Management Corp.

Like other mortgage REITs, Hanover, of Edison, N.J., has been hit by losses on the value of its holdings of mortgage bonds and increased costs of financing.

"Throughout this period of upheaval in the mortgage and financial markets we have worked to find the best solution for the shareholders and employees of Hanover," Hanover's chairman and chief executive, John A. Burchett, said in a press release issued Tuesday after the market closed. Walter Mortgage "brings a strong balance sheet and track record to the combined companies. …

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