First BanCorp, the parent corporation of FirstBank Puerto Rico, has signed a letter of intent to sell approximately a $701.9 million loan portfolio, with a net book value of $602.8 million, of which approximately 95% is adversely classified. The buyer is a new joint-venture entity that is majority-owned by a global financial services firm, First BanCorp says.
The main goal of the transaction is to accelerate de-risking and improve the corporation's risk profile, First BanCorp explains. The sale will reduce First BanCorp's classified assets and nonperforming loans by approximately $574.7 million and $301.6 million, respectively. The transaction will decrease the corporation's Puerto Rico nonperforming construction and commercial real estate loans by 58% and 27%, respectively, and its Puerto Rico classified residential construction loans by 64%.
The $602.8 million net book value portfolio is composed of 67% construction loans, 27% commercial real estate loans and 6% commercial loans.
The corporation expects to receive approximately $401.9 million, or a purchase price of 57.25% of the $701.9 million unpaid principal balance of the loans as of Sept. 30.
SOURCE: First BanCorp