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SEC Filings

DITECH HOLDING CORP filed this Form 424B1 on 09/16/1997
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be released from his personal guarantee of indebtedness of HCP, which equaled
$2,115,000 as of June 30, 1997. Because the contribution by the Principals of
the HCP Preferred to HCHI in exchange for shares of Common Stock will be a
taxable transaction for the Principals, HCHI will lend up to $1,750,000 to the
Principals to enable the Principals to pay tax on their gains. The loans will be
secured by 116,667 shares of the Principals' Common Stock but will otherwise be
nonrecourse to the Principals (so that, upon a default by a Principal, HCHI
could not reach other assets of the Principals for repayment). If the Earn-Out
vests after the closing of the Offering, as additional consideration to the
Principals for their contribution of the HCP Preferred to HCHI, the loans will
be forgiven and the Principals will be entitled to receive up to 216,667
additional shares of Common Stock. Based on a public offering price of $15.00
per Unit (with no value for the Warrants), the value of the benefits that the
Principals may receive in connection with the Formation Transactions may equal
up to $15,750,010 (including the forgiveness of loans from HCHI of up to
$1,750,000, but without regard to any receivables distributed to the Principals
by HCP, any salaries or other compensation for services, any additional shares
of Common Stock that may be issued as compensation for services and any releases
of personal guarantees). In addition, the Principals will serve as directors and
officers of the Company, for which they will collectively receive aggregate
annual base salaries of $975,000 and will be eligible to participate in the
Company's 1997 Stock Option Plan and the Company's Bonus Incentive Compensation
Plan. See "Risk Factors -- Principals' Conflicts of Interest;"
"Management -- Executive Compensation;" " -- Bonus Incentive Compensation Plan"
and " -- 1997 Stock Option Plan;" "Structure and Formation Transactions;" and
"Certain Transactions."
     The investment and financing policies of the Company and its policies with
respect to certain other activities, including growth, debt capitalization,
distributions, REIT status and operating policies, will be determined by the
Board of Directors. The Board of Directors has no present intention to amend or
revise these policies. However, the Board of Directors may do so at any time
without a vote of the Company's stockholders. A change in these policies could
adversely affect the Company's financial condition or results of operations.
     The capitalization of HCHI and the amounts and terms of the loans of up to
$1,750,000 to be made to the Principals were not determined by arm's-length
negotiations. The Company did not obtain an independent valuation of the
businesses of the Company or a fairness opinion in connection with the
capitalization and valuation of HCHI. No third-party appraisals or fairness
opinions have been or will be obtained in connection with the contributions of
the HCP Preferred to HCHI. The value of the Units to be purchased by the public
were determined based upon discussions between the Principals and the
Representatives. See "Structure and Formation Transactions," "Underwriting" and
"Certain Transactions." Accordingly, there can be no assurance that the initial
public offering price of the Units in the Offering reflects the fair market
value thereof.
     The terms of the agreements pursuant to which the Principals will acquire
their Common Stock, and will be made loans to pay taxes on their acquisitions of
Common Stock, were not determined through arms-length negotiation. The
Principals may have a conflict of interest with respect to their obligations as
officers and directors of the Company to enforce the terms of such agreements.
See "Structure and Formation Transactions -- The Formation of
HCHI -- Determination and Valuation of Ownership Interests." Certain aspects of
the businesses of the Company will be carried on through HCP, HCMC and HCS
because income from the businesses might jeopardize HCHI's status as a REIT if
such operations were carried on directly by HCHI. After the consummation of the
Formation Transactions and the closing of the Offering, the Principals will own
all of the voting common stock of HCP, and HCHI will own all of the non-voting
HCP Preferred. As the holder of the HCP Preferred, HCHI will receive 97% of the
dividend distributions generated by the operations of HCP, HCMC and HCS (and,
based on a public offering price of $15.00 per Unit, will have a