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Walter Investment Management: 'Substantial doubt' raised over company's future

Walter Investment Management Corp. said "substantial doubt" has been raised about whether the company can continue on as it weighs implementing a prepackaged reorganization plan under Chapter 11 of the bankruptcy code.

The company expects to continue for at least the next 12 months, given various changes it is currently undergoing. But Walter Investment is working to solve several issues that have created "certain challenges and uncertainties" to its business, liquidity and financing activities.

Walter Investment said it may be unable to maintain sufficient liquidity to operate its servicing and lending businesses because it is unable to renew, replace or extend various financing or facilities on favorable terms. It is also at risk of being unable to comply with parts of its debt agreements, to resolve mandatory clean-up calls or to restructure its corporate debt.

The company's restructuring attempts have garnered unfavorable outlooks from both Moody's and S&P Global Ratings, which have recently downgraded the company.

The company is working with its lenders on waivers or amending their agreements in case there is any default, amortization event, termination event or otherwise. The company said there are no known existing default events, and that dues have not accelerated.

The company is also working to expand its current facilities, or obtain new ones, for new loan originations. The company is also looking to grow its required reverse loan repurchases through new and existing master repurchase agreements. The company amended its credit facility with RMS to increase the size by $100.0 million on a committed basis, with an expiration date of May 2018.

After falling below New York Stock Exchange compliance standards in July, the company said it is also working with the exchange to regain compliance by restructuring its corporate debt. Additionally, the company is resolving its obligations to mandatory clean-up calls by negotiating a term sheet with a counterparty and communicating with government agencies, regulators and others on the status of its debt restructuring. There are no pending sanctions, suspensions or prohibitions from the stakeholders that the company is aware of, Walter Investment said.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.