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OneMain Holdings units sell JV stake to New Residential Investment, Blackstone funds for $112M

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OneMain Holdings units sell JV stake to New Residential Investment, Blackstone funds for $112M

OneMainHoldings Inc. on April 1 announced the sale of its 47% interest inSpringCastle to certain affiliates of New Residential Investment Corp. and funds managed byBlackstone Group LP.

SpringCastle is a joint venture formed between OneMain andjoint venture partners, New Residential Investment and Blackstone, to purchasea consumer loan portfolio from HSBC in 2013.

OneMain continues to service the SpringCastle portfoliothrough its London, Ky., servicing center.

The deal closed March 31.

The terms of the transaction include the sale by indirectwholly owned subsidiaries of SpringleafFinance Corp. of OneMain's entire interest in SpringCastle forapproximately $112 million in cash which includes a 10% holdback to be held inescrow for a period of up to five years with the release tied to ultimateportfolio performance.

As a result of the sale, SpringCastle's assets andliabilities will not be reflected on OneMain's consolidated balance sheet as ofMarch 31. As of Dec. 31, 2015, OneMain's consolidated balance sheet reflected$1.6 billion of assets at book value and $1.9 billion of liabilities at bookvalue, attributable to SpringCastle. OneMain expects$230 million pretax gain on sale.

OneMain's 2016 core EPS guidance of $4.50 to $5.00 incorporatedapproximately 35 cents to 40 cents in per share contribution from SpringCastlefor the full year.

According to a Form 8-K filed April 1, prior to the deal,New Residential Investment and Blackstone owned 30% and 23% limited liabilitycompany interest in the joint venture, respectively. Following the purchase ofthe stake, New Residential Investment and Blackstone own 53.5% and 46.5%limited liability company interest in the joint venture, respectively.

The purchase unanimously approved by a special committeecomposed entirely of independent directors to which New ResidentialInvestment's board delegated full authority to consider, negotiate anddetermine whether to engage in the transaction.

New Residential Investment's transaction committee wasadvised by legal counsel Kirkland & Ellis LLP and received a fairnessopinion from its financial adviser Citigroup Global Markets Inc.