Warren Buffet’s Berkadia III Buys Capmark Financial Group

Berkadia III LLC, a newly formed entity owned by Leucadia National Corp. and Warren Buffett's Berkshire Hathaway Inc., has agreed to purchase Capmark Financial Group Inc. and its wholly owned subsidiaries, Capmark Finance Inc. and Capmark Capital Inc.

The agreement provides for a put option whereby Capmark has the right to sell its North American servicing and mortgage banking businesses. Capmark paid the Berkadia III $40 million in cash for the put option.

If Capmark exercises the put option, then, upon the terms and subject to the conditions provided for in the agreement, Capmark will transfer the acquired assets to Berkadia III for an aggregate purchase price of $490 million, subject to various closing adjustments, including an upward adjustment for servicing advances and warehoused loans.

Capmark Financial Group, which reported a net loss of $1.6 billion for the second quarter, said in a separate announcement that it is exploring ways to restructure the company. One possibility is to reorganize via a Chapter 13 bankruptcy filing. The company's sale of its mortgage business to Berkadia III includes variations in pricing that are dependent on whether Capmark decides to go the bankruptcy route.

As of June 30, the carrying value of Capmark's total loan portfolio was $10.7 billion, down from $12.2 billion as of Dec. 31, 2008.

SOURCE: Capmark Financial Group Inc.


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