Cendant completes spinoff of unit combining mortgage, fleet businesses

Impact on PHH jobs in Sparks uncertain

February 01, 2005|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Cendant Corp. said yesterday that it completed the spinoff of its mortgage and locally based PHH Arval fleet management businesses to shareholders.

Stock in the newly combined company, called PHH Corp., is expected to start trading today on the New York Stock Exchange under the symbol "PHH."

It's unclear whether the spinoff will have any immediate impact on PHH Mortgage, formerly Cendant Mortgage, based in Mount Laurel, N.Y., and PHH Arval, the fleet management services business based in Sparks. The Sparks operation employs 1,000 workers.

"It's a great opportunity for PHH," said A.B. "Buzzy" Krongard, the former Alex. Brown chief executive who recently agreed to become PHH Corp.'s nonexecutive chairman of the board.

"They have two good businesses, one very stable, the fleet management business, and the mortgage business, which is subject to some of the pressures that affect homebuilding and buying. We feel very well-positioned," he said.

Krongard said any changes at the Sparks operation would be up to management.

PHH, originally founded in Baltimore, was sold to HFS Inc. in April 1997, and then less than a month later, HFS merged with CUC International to form Cendant.

Cendant said the spinoff was part of a strategy to focus on its core travel and real estate service businesses. It said it will take a one-time write-off of between $500 million and $650 million after taxes to account for the decline in the asset values of PHH's businesses.

About two-thirds of that amount is attributable to the fleet management business, Cendant said in a statement.

"The PHH spinoff completes the next step in Cendant's program to divest itself of profitable, but noncore business units," Ronald L. Nelson, Cendant's president and chief financial officer, said in a statement.

Under the new structure, and as previously announced, Cendant said yesterday that it has entered into a venture with PHH to originate mortgages from customers of Cendant's franchised and company-owned real estate brokerage businesses, including Coldwell Banker, Century 21 and ERA.

Cendant said it distributed one share of PHH common stock for every 20 shares of Cendant common stock outstanding as of Jan. 19. A total of 52.7 million shares were distributed.

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