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SEC Filings

424B1
DITECH HOLDING CORP filed this Form 424B1 on 09/16/1997
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                      STRUCTURE AND FORMATION TRANSACTIONS
 
THE STRUCTURE OF THE COMPANY
 
     The Company will conduct its operations through several entities. The
structure is designed primarily to (i) permit the Company to acquire the
ownership of a majority of the shares of stock in HCP and HCP's subsidiaries
while preserving the Company's qualification as a REIT, and (ii) permit certain
activities of HCP to be wound down before and after the closing of the Offering.
See "Federal Income Tax Considerations -- Requirements for Qualification as a
REIT."
 
HCHI
 
     HCHI will acquire the Investment Portfolio using the net proceeds of the
Offering and the net proceeds of borrowings and securitizations. It is
anticipated that HCHI's assets will consist primarily of the Investment
Portfolio and the HCP Preferred.
 
     Initially, the Principals will own 716,677 shares of Common Stock of HCHI,
or 12.54% of the outstanding shares of Common Stock. The Principals may acquire
additional shares of Common Stock upon the exercise of vested stock options
granted to them under the Company's 1997 Executive and Non-Employee Director
Stock Option Plan or pursuant to the Company's Bonus Incentive Compensation
Plan. See "Management -- 1997 Stock Option Plan;" and "Management -- Bonus
Incentive Compensation Plan." Up to 216,667 additional shares of Common Stock
will be issued to the Principals (giving them up to 15.73% of the outstanding
shares of Common Stock, subject to dilution by other issuances), if the Earn-Out
vests. The Earn-Out may vest in full or in part on any September 30 beginning
with September 30, 1998 and ending with September 30, 2002 (each, an "Earn-Out
Measuring Date"). The Earn-Out will vest in full as of any Earn-Out Measuring
Date through which the return on a Unit is at least equal to the initial public
offering price of the Unit. One-third of the Earn-Out will vest as of any
Earn-Out Measuring Date through which the return on a Unit is at least equal to
a 20% annualized return on the initial public offering price of the Unit. The
return on a Unit is determined by adding (i) the appreciation in the value of
the Unit since the closing of the Offering and (ii) the amount of distributions
made by the Company on the share of Common Stock included in the Unit since the
closing of the Offering. The appreciation in the value of a Unit as of any
Earn-Out Measuring Date is the average difference, during the 30 day period that
ends on the Earn-Out Measuring Date, between the market price of the share of
Common Stock included in the Unit and the initial public offering price of the
Unit multiplied by two to take into account the value of the Warrant included in
the Unit. In determining whether the Earn-Out has vested, appropriate
adjustments will be made for stock splits, recapitalizations, stock dividends
and transactions having similar effects. The shares of Common Stock acquired by
the Principals (including any additional shares to be issued upon the vesting of
the Earn-Out) and the forgiveness of any loans to the Principals upon the
vesting of the Earn-Out represent the consideration given to the Principals in
exchange for their contribution of the HCP Preferred to HCHI.
 
     It is anticipated that HCHI will receive substantially all of its revenue
from the Investment Portfolio and the operations of HCP, HCMC and HCS. The
amounts that HCHI may in turn distribute to its stockholders will be reduced by
any tax that HCHI must pay because it fails to qualify as a REIT or is otherwise
taxable. See "Federal Income Tax Considerations -- Requirements for
Qualification as a REIT" and "-- Taxation of HCHI."
 
HCP, HCMC AND HCS
 
     Except as described below, HCP, HCMC and HCS will continue to own their
pre-Offering assets and conduct their pre-Offering activities as taxable,
non-controlled subsidiaries of HCHI. HCP will conduct the Due Diligence
Operations and will support HCHI's acquisition and investment activities by
providing due diligence services. HCMC will originate, sell and service
Multifamily Mortgage Loans and Commercial Mortgage Loans and will serve as a
source of Multifamily Mortgage Loans and Commercial Mortgage Loans for HCHI. HCS
will facilitate the Company's trading activities by acting as a broker/dealer.
 
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