EDISON, N.J., April 1 /PRNewswire-FirstCall/ -- Hanover Capital
Mortgage Holdings, Inc. (NYSE Amex: HCM) (the "Company" or "HCM")
reported net earnings (loss) for the quarter ended December 31,
2008 of $(2.77) million, or $(0.32) per share on a fully diluted
basis, compared to $(37.7) million, or $(4.37) per share on a fully
diluted basis, for the fourth quarter 2007. Net earnings (loss) for
the year ended December 31, 2008 was $(15.1) million, or $(1.74)
per share on a fully diluted basis, versus $(80.0) million, or
$(9.68) per share on a fully diluted basis, for the year ended
December 31, 2007. There was no estimated taxable income for REIT
distribution purposes for the years ended December 31, 2008 and
2007. Accordingly, the Company did not declare a fourth quarter
dividend. The Company's book value (deficit) per share declined to
$(4.70) as of December 31, 2008 primarily attributable to the net
loss of $(15.1) million for the year ended December 31, 2008. For
the year ended December 31, 2008, the Company had a net loss of
$(15.1) million compared to a net loss of $(80.0) million for the
previous year. This difference is primarily due to the significant
impairments of the Subordinate MBS portfolio in 2007. The
impairments taken in 2008 were offset by the gain realized on the
surrender of the Company's Subordinate MBS in settlement of the
Repurchase Agreement obligation in August 2008. The remainder is
attributable to the increase in the Company's general operating
deficit for the year ended December 31, 2008. Significant changes
in the Company's financial position as of December 31, 2008, from
December 31, 2007, are primarily related to the surrendering of the
Subordinate MBS portfolio in August 2008, the reduction in the size
of its Agency MBS portfolio and the debt related to the financing
of those portfolio assets. On September 30, 2008, the Company
entered into an Agreement and Plan of Merger, with Walter
Industries, Inc. ("Walter") and JWH Holding Company, which was
amended and restated on October 28, 2008 and was subsequently
amended and restated on February 6, 2009, to, among other things,
add Walter Investment Management LLC ("Spinco"), a newly-created,
wholly-owned subsidiary of Walter, as an additional party to the
transaction. On February 17, 2009, the merger agreement was further
amended to address certain closing conditions and certain Federal
income tax consequences of the spin-off and merger. Our board of
directors unanimously approved the merger, on the terms and
conditions set forth in the second amended and restated merger
agreement, as amended. In connection with the merger, the Surviving
Corporation will be renamed "Walter Investment Management
Corporation." The merger agreement contemplates that the merger
will occur no later than June 30, 2009. The Registration Statement
of the Company on Form S-4, including the proxy
statement/prospectus filed with the Securities and Exchange
Commission relating to the pending merger of Spinco and the
Company, has been declared effective by the Securities and Exchange
Commission. In addition, in connection with the Company's pending
merger, on September 30, 2008, the Company entered into an exchange
agreement with Taberna Preferred Funding, Ltd. ("Taberna") and an
exchange agreement with Amster Trading Company and Ramat
Securities, Ltd. (the "Amster Parties") (which exchange agreements
were amended on February 6, 2009), to acquire (and subsequently
cancel) the outstanding trust preferred securities of HST-I,
currently held by Taberna, and the trust preferred securities of
HST-II, currently held by the Amster Parties. In connection with
the pending merger, the Company established a record date of
February 17, 2009, and will hold a special meeting of stockholders
on April 15, 2009 to approve the merger and certain other
transactions described in the proxy statement/prospectus. Pending
approval by the Company's stockholders and the satisfaction of
certain other conditions, the merger is expected to be completed in
the second quarter 2009. No vote of Walter stockholders is
required. John A. Burchett, the Company's President and CEO,
commented, "We look forward to our April 15, 2009 special meeting
and are optimistic that the Company's shareholders will provide the
requisite vote needed to approve of the pending merger with
Spinco." HCM will host an investor conference call on Thursday,
April 2, 2009 at 11:00 AM EDT. The call will be broadcast over the
Internet, at http://www.investorcalendar.com/. To listen to the
call, please go to the Web site at least fifteen minutes prior to
the start of the call to register, download, and install any
necessary audio software. For those not available to listen to the
live broadcast, a replay will be available shortly after the call
at http://www.investorcalendar.com/ for a period of 30 days. To
access the live call by phone, dial 877-407-8035 (international
callers dial 201-689-8035) several minutes before the call. A
recorded replay may be heard through Monday, April 6, at 11:59 PM
ET by dialing 877-660-6853 (international callers dial
201-612-7415) and using playback account #286 and conference ID
#318449. Hanover Capital Mortgage Holdings, Inc. is a mortgage REIT
staffed by seasoned mortgage capital markets professionals. HCM
invests in prime mortgage loans and mortgage securities backed by
prime mortgage loans. For further information, visit HCM's Web site
at http://www.hanovercapitalholdings.com/. Additional Information
and Where to Find It In connection with the proposed spin-off of
the financing business of Walter Industries, Inc. through its
wholly-owned subsidiary, Walter Investment Management LLC, and the
proposed merger of Walter Investment Management LLC with Hanover
Capital Mortgage Holdings, Inc. and certain related transactions,
Hanover Capital Mortgage Holdings, Inc. filed a registration
statement with the SEC on Form S-4, as amended, containing a proxy
statement/prospectus (Registration No. 333-155091), and Hanover
Capital Mortgage Holdings, Inc. will be filing other documents
regarding the proposed transaction with the SEC as well. BEFORE
MAKING ANY VOTING OR INVESTMENT DECISION, INVESTORS ARE URGED TO
READ THE PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED
TRANSACTION AND ANY OTHER RELEVANT DOCUMENTS CAREFULLY IN THEIR
ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. The proxy
statement/prospectus has been mailed to stockholders of Hanover
Capital Mortgage Holdings, Inc. and Walter Industries, Inc.
Stockholders will be able to obtain a free copy of the proxy
statement/prospectus, as well as other filings containing
information about Hanover Capital Mortgage Holdings, Inc. and
Walter Industries, Inc., without charge, at the SEC's Internet Web
site (http://www.sec.gov/). Copies of the proxy
statement/prospectus and the other filings with the SEC that will
be incorporated by reference in the proxy statement/prospectus can
also be obtained, without charge, at Hanover Capital Mortgage
Holdings, Inc.'s Web site (http://www.hanovercapitalholdings.com/).
Walter Industries and Hanover and their respective directors and
executive officers and other persons may be deemed to be
participants in the solicitation of proxies in respect of the
proposed merger and related transactions. Information regarding
Walter Industries' directors and executive officers is available in
Walter Industries' proxy statement for its 2009 annual meeting of
stockholders and Walter Industries' 2008 Annual Report on Form
10-K, which were filed with the SEC on March 10, 2009, and February
27, 2009, respectively, and information regarding Hanover's
directors and executive officers is available in Hanover's proxy
statement for its 2008 annual meeting of stockholders and Hanover's
2008 Annual Report on Form 10-K, which were filed with the SEC on
April 24, 2008, and March 31, 2009, respectively. Other information
regarding the participants in the proxy solicitation and a
description of their direct and indirect interests, by security
holdings or otherwise, is contained in Hanover's proxy
statement/prospectus and other materials referred to in Hanover's
proxy statement/prospectus. Safe Harbor Statement Except for
historical information contained herein, the statements in this
release are forward-looking and made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements, including expressions such as
"believe," "anticipate," "expect," "estimate," "intend," "may,"
"will," and similar expressions involve known and unknown risks,
uncertainties, and other factors that may cause Walter Industries'
or Hanover's actual results in future periods to differ materially
from the expectations expressed or implied by such forward-looking
statements. These factors include, among others, the following: the
market demand for Walter Industries' and Hanover's products as well
as changes in costs and the availability of raw material, labor,
equipment and transportation; changes in weather and geologic
conditions; changes in extraction costs, pricing and assumptions
and projections concerning reserves in Walter Industries' mining
operations; changes in customer orders; pricing actions by Walter
Industries' and Hanover's competitors, customers, suppliers and
contractors; changes in governmental policies and laws; further
changes in the mortgage-backed capital markets; changes in general
economic conditions; and the successful implementation and
anticipated timing of any strategic actions and objectives that may
be pursued, including the announced separation of the Financing
business from Walter Industries. In particular, the separation of
Walter Industries' Financing business is subject to a number of
closing conditions which may be outside of Walter Industries'
control. Forward-looking statements made by Walter Industries in
this release, or elsewhere, speak only as of the date on which the
statements were made. Any forward-looking statements should be
considered in context with the various disclosures made by Walter
Industries and Hanover about our respective businesses, including
the Risk Factors described in Walter Industries' 2008 Annual Report
on Form 10-K, the Risk Factors described in Hanover's 2008 Annual
Report on Form 10-K, and each of Walter Industries' and Hanover's
other filings with the Securities and Exchange Commission. Neither
Walter Industries nor Hanover undertakes any obligation to update
its forward-looking statements as of any future date. - charts to
follow - HANOVER CAPITAL MORTGAGE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (in thousands, except share and per
share data) December 31, December 31, 2008 2007 ---- ---- Assets
Cash and cash equivalents $501 $7,257 Accrued interest receivable
62 1,241 Mortgage Loans Collateral for CMOs 4,778 6,182 Mortgage
Securities Trading ($2,577 and $30,045, pledged respectively, at
period ended) 4,656 30,045 Available for sale (all pledged under a
single Repurchase Agreement) - 82,695 Other subordinate security,
available for sale 1,585 1,477 Equity investments in unconsolidated
affiliates 175 1,509 Other assets 647 4,782 --- ----- $12,404
$135,188 ======= ======== Liabilities Repurchase Agreements
(secured with Mortgage Securities) $- $108,854 Note Payable
(collateralized with Mortgage Securities classified as trading)
2,300 - Collateralized mortgage obligations (CMOs) 2,904 4,035
Accounts payable, accrued expenses and other liabilities 1,191
5,954 Obligation assumed under guarantee of lease in default by
subtenant 831 - Deferred interest payable on liability to
subsidiary trusts 4,597 755 Liability to subsidiary trusts issuing
preferred and capital securities 41,239 41,239 ------ ------ 53,062
160,837 ------ ------- Commitments and Contingencies - -
Stockholders' Equity (Deficit) Preferred stock, $0.01 par value, 10
million shares authorized, no shares issued and outstanding - -
Common stock, $0.01 par value, 90 million shares authorized,
8,654,562 and 8,658,562 shares issued and outstanding as of
December 31, 2008 and December 31, 2007, respectively 86 86
Additional paid-in capital 102,981 102,939 Cumulative earnings
(deficit) (86,340) (71,289) Cumulative distributions (57,385)
(57,385) ------- ------- (40,658) (25,649) ------- ------- $12,404
$135,188 ======= ======== (Unadudited) Three Months Ended Years
Ended December 31, December 31, ------------ ------------ 2008 2007
2008 2007 2006 ---- ---- ---- ---- ---- Revenues Interest income
$258 $5,509 $10,592 $24,823 $24,278 Interest expense 1,039 6,371
15,135 19,224 13,942 ----- ----- ------ ------ ------ (781) (862)
(4,543) 5,599 10,336 Loan loss provision - - - - - - - - - - Net
interest income (781) (862) (4,543) 5,599 10,336 Net gain realized
on surrender of Subordinate MBS - - 40,929 - - Gain (loss) on sale
of mortgage assets 25 - 485 (803) 834 Gain (loss) on mark to market
of mortgage assets 90 (32,609) (40,453) (75,934) 148 (Loss) gain on
freestanding derivatives - (469) (98) 1,199 (2,344) Technology 49
209 374 1,155 2,857 Loan brokering and advisory services 30 - 65
157 105 Other income (loss) 74 (1,161) 1,765 (1,542) (77) -- ------
----- ------ --- Total revenues (513) (34,892) (1,476) (70,169)
11,859 ---- ------- ------ ------- ------ Expenses Personnel 958
912 4,098 3,910 4,239 Legal and professional 699 729 2,513 2,097
2,777 Impairment of investments in unconsolidated affiliates - -
1,064 - - Lease obligation assumed from defaulting subtenant - -
993 - - General and administrative 220 229 1,289 1,505 1,183
Depreciation and amortization 17 155 1,045 616 708 Occupancy 79 82
327 315 315 Technology 11 113 159 526 1,109 Financing - 257 896 815
415 Goodwill impairment - - - - 2,478 Other 301 387 1,306 880 689
--- --- ----- --- --- Total expenses 2,285 2,864 13,690 10,664
13,913 ----- ----- ------ ------ ------ Operating income (loss)
(2,798) (37,756) (15,166) (80,833) (2,054) Equity in income of
unconsolidated affiliates 30 28 115 110 110 Minority interest in
loss of consolidated affiliate - - - - (5) -- -- -- -- -- Income
(loss) from continuing operations before income tax provision
(2,768) (37,728) (15,051) (80,723) (1,939) Income tax provision - -
- - 12 -- -- -- -- -- Income (loss) from continuing operations
(2,768) (37,728) (15,051) (80,723) (1,951) ------ ------- -------
------- ------ DISCONTINUED OPERATIONS Income (loss) from
discontinued operations before gain on sale and income tax
provision - 12 - (611) (917) Gain on sale of discontinued
operations - - - 1,346 - Income tax provision from discontinued
operations - - - - 58 - - - - -- Income (loss) from discontinued
operations - 12 - 735 (975) - -- - --- ---- Net income (loss)
$(2,768) $(37,716) $(15,051) $(79,988) $(2,926) ======= ========
======== ======== ======= Net Income (loss) per common share -
Basic Income (loss) from continuing operations $(0.32) $(4.37)
$(1.74) $(9.77) $(0.23) Income (loss) from discontinued operations
- - - 0.09 (0.12) - - - ---- ----- Net income (loss) per common
share - Basic $(0.32) $(4.37) $(1.74) $(9.68) $(0.35) ====== ======
====== ====== ====== Net Income (loss) per common share - Diluted
Income (loss) from continuing operations $(0.32) $(4.37) $(1.74)
$(9.77) $(0.23) Income (loss) from discontinued operations - - -
0.09 (0.12) - - - ---- ----- Net income (loss) per common share -
Diluted $(0.32) $(4.37) $(1.74) $(9.68) $(0.35) ====== ======
====== ====== ====== Weighted average shares outstanding - Basic
8,636,162 8,629,362 8,634,363 8,265,194 8,358,433 Weighted average
Shares outstanding - Diluted 8,636,162 8,629,362 8,634,363
8,265,194 8,358,433 DATASOURCE: Hanover Capital Mortgage Holdings,
Inc. CONTACT: John Burchett, CEO, Irma Tavares, COO, or Harold
McElraft, CFO, all of Hanover Capital Mortgage Holdings, Inc.,
+1-732-593-1044 Web Site: http://www.hanovercapitalholdings.com/
Copyright