PHH Deal Collapses After Banks Back Off

Blackstone Group says lenders reneged on original financing terms
By Jim O'Neill,  Newser User
Posted Jan 2, 2008 7:27 AM CST
A plaque with the Blackstone Group's company logo is seen at the company's headquarters in New York in this Aug. 13, 2007 file photo.    (Associated Press)
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(Newser) – The $1.8 billion sale of mortgage and auto-leasing company PHH to General Electric and  the Blackstone Group is off the table, after Blackstone was snubbed by banks it had lined up for its share of financing, Bloomberg reports. The deal is the latest private-equity buyout felled by the subprime contagion.

Blackstone said its lenders wouldn’t provide financing under original terms negotiated in March. PHH said it would seek a $50 million termination fee from Blackstone. There were a record $787 billion in LBOs last year, but some $186 billion in deals fell though after the subprime collapse killed demand for the high-yield loans and bonds used to finance the buys.