"Blackstone was prepared to close its end of the transaction using the financing that in March was originally committed to be made available," John Ford, a spokesman for Blackstone, said in a statement. "We regret that the banks are now unwilling to provide financing under the terms they originally agreed to."
GE, which said it isn't on the hook for any breakup fees, expressed disappointment that the deal fell apart. "We certainly wanted to do the transaction and remain committed to the fleet services space," said Stephen White, a spokesman for GE.
Dan Reid, who advises acquiring companies in his role as national managing partner for Grant Thornton's transaction advisory services group, wasn't surprised the deal didn't work out. Not only is PHH in the mortgage business, but the credit crunch has made any sizable acquisition tougher, he said.
Financing troubles were also blamed when a $1.35 billion deal to sell the Sparrows Point steel mill fell apart last month.
Ron Kerdasha, who manages the Baltimore office of LaSalle Business Credit, expects to see more of the same this year. "The financing contingencies on these deals are no longer going to be an afterthought," he said.
The evaporated deal is the latest in a series of bumps in the road for PHH, founded in Baltimore in 1946 and bought out in 1997 by a New Jersey company. PHH struggled to file timely audited financial statements after it was spun off from Cendant Corp. in 2005.
And even with its better-than-average mortgage niche, it's hurting from the two-year-old slump in home sales and the pullback in credit for mortgages, which started in the summer with subprime and quickly rippled through the rest of the industry. PHH lost $38 million from July through September.
jamie.smith.hopkins@baltsun.com
