PHH

The mortgage crisis and resulting credit crunch could sink a deal to buy the parent of PHH Arval, a vehicle fleet leasing company with 1,000 employees in Sparks, the company said yesterday. The disclosure sent shares of parent PHH Corp. down nearly 15 percent, or $4.26, to close at $24.24, reflecting investor skepticism that PHH will be able to close a deal announced in March to be sold for $31.50 a share. Under that deal, which valued the company at $1.8 billion, General Electric Co. subsidiary GE Capital Solutions planned to buy all of PHH, fold the fleet leasing operations into its own and immediately sell PHH's larger mortgage unit to Blackstone Group, a New York-based private equity firm.

Robert D. Kunisch, the executive who oversaw the sale of PHH Corp., has joined a Baltimore private equity investment fund as a special partner.Kunisch has teamed up with ABS Capital Partners, which manages about $900 million for endowments, pension funds and wealthy individuals.He will advise service companies in which ABS has an investment. In some cases he will work as a consultant to the companies, and in others he will join their boards of directors.ABS mostly invests in young, fast-growing companies, and might benefit from a seasoned executive, said Donald B. Hebb Jr., managing general partner of ABS."

PHH Vehicle Management Services, the Hunt Valley-based car-leasing subsidiary of Cendant Corp., will be sold to Avis Rent A Car Inc. in a transaction valued at more than $5 billion.The deal comes a little more than two years after 51-year-old PHH Corp. -- which provided vehicle management, relocation and mortgage banking services through corporate clients -- was sold to a forerunner of Cendant.The terms call for Cendant to get $1.5 billion in cash and $360 million in preferred stock -- boosting Cendant's interest in Avis from 19 percent to 34 percent.

New positionsBrooks joins PHH as senior vice presidentPHH Vehicle Management Services appointed William F. Brooks Jr. senior vice president and general manager for corporate card services. Formerly a vice president with GE Capital Financial, he will oversee profitability, interest and growth at PHH/Paymentech, its integrated charge-card joint venture.Crosby Marketing Communications named Theresa Brown Shute assistant traffic and production manager at the Annapolis-based agency. She will schedule and track projects and coordinate services with printers and other vendors.

HFS Inc. yesterday said it will pay about $1.6 billion in stock for PHH Corp. of Hunt Valley -- about $100 million less than the deal originally called for.In light of a drop in its stock price, HFS said it boosted the number of shares it will pay PHH shareholders.But the drop in the HFS price means PHH shareholders now stand to get about $46.30 per share -- less than the $49.50 announced in the acquisition agreement in November.The two companies said the acquisition is not in danger.PHH shareholders will still get a hefty premium over the $30.75 price of shares before the deal was announced.

Moving on: Executives being relocated overseas last year were most likely to be sent to Britain, according to PHH Relocation. Britain's competitive labor costs and tax rates and its development as a transportation and European business center have made it more attractive for transfers.Apartment glut: There may be an oversupply of apartments in some parts of the country this year, according to researchers at Salomon Brothers Inc. The researchers found that occupancy rates are up in much of the Northeast and in California, but are expected to be down in some big cities in the Southeast and Western cities including Las Vegas, Portland, Phoenix and Salt Lake City.

Five years ago, HFS Inc. was tiny compared with PHH Corp. by almost every measure.Just 2 years old, the Parsippany, N.J.-based franchiser of Main Street lodges such as Howard Johnson and Ramada had $18.2 million in net income.That was about one-third the net income of then 46-year-old PHH -- the Baltimore-founded company with car fleet management, corporate relocation and mortgage banking businesses.By last year, after a string of acquisitions, HFS was reporting $170 million in net income, more than double PHH's.

ONE OF THE most powerful trends under way in the home real estate market nationwide -- intricate "cross-selling" tie-ins among brokerage, mortgage, insurance and other service providers -- has just moved to a new level. Call it the total package approach.A major issuer of Visa cards and MasterCards has just put together a one-stop shopping network of cooperating firms across the country that claims to save consumers hard cash at every phase of the home purchase or sale process. The total approach includes:Six-month advance loan commitments of up to $1 million that enable home shoppers to negotiate with sellers or builders as "cash buyers."

WASHINGTON -- PHH Corp.'s half-century life as an independent company ended yesterday in about six minutes, as shareholders approved the $1.8 billion sale of the Hunt Valley-based company to HFS Inc. of New Jersey.There were no fond remembrances of the founding of the company in Baltimore by Duane L. Peterson, Richard M. Heather and Harley W. Howell. No remorse about the loss of a locally owned company. No entreaties for PHH to stay independent.The deal calls for PHH shareholders to get 0.825 shares of HFS stock for every PHH share.

HFS Inc. said yesterday that it would buy back up to 2.6 million shares as a drop in the company's stock price threatened the value of its offer for PHH Corp. of Hunt Valley.As HFS, of Parsippany, N.J., announced the move, its shares dipped below $60 before rallying to close at $60.875.If the average price of HFS stock falls below $60, PHH shareholders will get less than HFS' offer of $49.50 per share.PHH said it did not expect a drop in HFS' stock price to disrupt the companies' plans. "Both managements are committed to seeing the merger go through," said Virginia Shelley, PHH's director of investor relations.

F. Lester Simon Jr., a retired Peterson, Howell and Heather executive who enjoyed photography and painting, died Friday at St. Joseph Medical Center of complications from a fall. He was 91. Mr. Simon was born in Baltimore and raised in Windsor Hills. He was a 1935 graduate of Forest Park High School and earned a bachelor's degree in accounting from the University of Maryland, College Park in 1939. During World War II, he enlisted in the Navy and served as an officer in the Pacific aboard the USS Sabine, a fleet oiler that had been built and launched at Bethlehem Steel's Sparrows Point shipyard.

Housing gloomy, despite uptick Sales of previously owned homes nudged up in November, but that didn't improve the broader picture of a feeble U.S. housing market racked by record-high foreclosures and harder-to-get credit. Even with the small 0.4 percent increase, the sales pace was still the second-lowest on record. Home prices also dropped 3.3 percent from November 2006. PHH's sale falls apart PHH Corp. announced that a deal to sell itself fell through because of financing problems.

The collapse of PHH Corp.'s deal to sell itself is a lesson for these credit-crunched times: If you're in the mortgage business, don't count on anyone getting the money to buy you - no matter how decent your prospects look. PHH agreed in March to sell out for $1.8 billion to General Electric Co., which wanted the company's Baltimore County-based vehicle fleet leasing arm and had agreed to immediately resell PHH's mortgage business to the Blackstone Group. But the complex deal began to unravel in September as the outlook for mortgage companies sharply worsened.

The mortgage crisis and resulting credit crunch could sink a deal to buy the parent of PHH Arval, a vehicle fleet leasing company with 1,000 employees in Sparks, the company said yesterday. The disclosure sent shares of parent PHH Corp. down nearly 15 percent, or $4.26, to close at $24.24, reflecting investor skepticism that PHH will be able to close a deal announced in March to be sold for $31.50 a share. Under that deal, which valued the company at $1.8 billion, General Electric Co. subsidiary GE Capital Solutions planned to buy all of PHH, fold the fleet leasing operations into its own and immediately sell PHH's larger mortgage unit to Blackstone Group, a New York-based private equity firm.

MARYLAND Death penalty repeal fails Efforts to repeal the death penalty in Maryland were dealt an apparently fatal blow yesterday when a key state Senate committee defeated the measure, leaving a court-ordered moratorium on state executions in place and some legislators weighing a study of the issue. pg 1A National Guard report released The Maryland Army National Guard had a cutthroat culture in the Recruiting and Retention Battalion where military discipline and bearing took "a back seat to selling" military service on recruits, according to an investigative report released yesterday.

In the Region Carrollton profit for '04 was $888,000 after write-down Carrollton Bancorp reported yesterday that its net income for last year dropped 4 percent to $888,000, or 31 cents a share, after accounting for a declining securities portfolio. The bank had said earlier that it would reduce its fourth-quarter earnings by $305,000 to account for the lower value of its preferred stock in Freddie Mac, hurt by an accounting scandal in 2003. Without the write-down, Carrollton had $1.1 million in earnings last year.

A.B. "BUZZY" Krongard, the former investment banker and CIA spymaster, can break boards with his hands, trained with police SWAT teams and studied martial arts with a personal kung fu master. He's not somebody who finds pleasure being out of the action. So, three months after he was pushed aside as the No. 3 man at the spy agency in a corporate-style shake-up, Krongard, 68, has agreed to become nonexecutive chairman of the board of PHH Corp., a big fleet management and mortgage loan company about to be spun off from its parent, Cendant Corp.

PHH CORP.'S ownership is switching yet again, and you know what that means: another long look at costs and profit projections, the type new proprietors always make. Maybe they'll sharpen their pencils on PHH's Baltimore County operation. Hundreds of the 950 jobs there are telephone call-center positions - helping corporations manage vehicle fleets - and we all know call centers are ripe for shifting overseas where wages are far lower. But nobody's learning how to say, "Hello, PHH Bangalore, how may I help you?"

PHH Arval, a Hunt Valley company that leases and manages automotive fleets, plans to announce today that it will build a new headquarters a few miles north in Sparks for its 1,000 employees and possibly add 200 jobs. The company, with corporate and government clients, needs room to grow and has been looking for more than a year for a new home, said George J. Kilroy, president and chief executive officer. "The new space is a little bigger and much more efficient," Kilroy said about the new three-story building being designed for PHH. "We think this part of Baltimore County has been very good for us. The talent pool comes not just from Baltimore County, but Baltimore City, surrounding counties and southern Pennsylvania."

New positions PHH Arval names three vice presidents PHH Arval announced the appointments of Barry S. Kirk, applications development; Janet L. Pelzel, associate general counsel; and Joshua L. Stuart, enterprise architecture, to vice presidents of the Hunt Valley-headquartered vehicle management company. Kirk will be responsible for internal and external web development, client server and mainframe development and support. With PHH since 1992, the Stewartstown resident graduated from Pennsylvania State University.