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Daniel Lewis’s Orange Capital Sends Letter to PHH Corp Encouraging Spinoffs

Orange Capital, PHH Corporation: Orange Capital, a hedge fund we track, recently disclosed a letter to PHH Corporation (NYSE:PHH)’s president and CEO which states that they are encouraged by reports that PHH Corporation intends to separate its Fleet Management Services and/or Mortgage segments, which might also bring to a sale of the company. The fund managed by Daniel Lewis asked for the public confirmation of this information and disclosure of the details.

PHH Corporation

Here’s the full letter:

Orange Capital’s Letter to Glen Messina

Earlier in September, Orange Capital disclosed it was initiating a position in PHH through buying some 2.87 million shares, which are equivalent to 5% of the company. Amid the move, Orange Capital and Daniel Lewis sent another letter to Glenn Messina expressing their opinions regarding the company’s situation and had four recommendations for the board.

The suggestions were:

1) Create a captive finance vehicle which would own a significant stake in the Company’s newly originated and existing excess MSRs

2) Hire a financial advisor to pursue a tax-efficient sale or IPO of Fleet Management

3) Immediately commence a share repurchase program or tender offer for $150 million of the Company’s common stock

4) After resolving outstanding repurchase obligations and securing new financing for newly originated MSRs, offer to exchange the 6% convertible notes due 2017 for a combination of cash and common stock

The full text of the letter, which also explains in details each of the aforementioned proposals is available below:

Orange Capital’s Letter to Glen Messina 2

Disclosure: none

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