PHH Merger Terminated

MOUNT LAUREL, NJ- PHH Corp. announced on January 1, 2008 that it had terminated the $1.8 billion merger agreement with General Electric Co. and the Blackstone Group. Blackstone, a private equity firm, failed to obtain required financing for the deal by December 31, as defined in their agreement.

GE and Blackstone had agreed in March 2007 to acquire PHH; under the terms, GE would retain PHH’s vehicle fleet company, PHH Arval. Immediately following the closure, GE would sell PHH Mortgage to Blackstone’s affiliate, Pearl Mortgage Acquisition 2 L.L.C.

As of September 17, Pearl Acquisition had expressed concern regarding the debt financing in order to complete the merge. Following the termination, PHH has sought a $50 million termination fee from the Blackstone Group.

“The board will determine in due course whether to continue to explore the company’s strategic alternatives,” said PHH Chairman A.B. Krongard when the termination was announced. “The board remains focused and committed to delivering value for our stockholders regardless of the decision.”

PHH Arval, a subsidiary of PHH Corporation, is the number 2 provider of fleet management and leasing services worldwide, trailing only GE Commercial Finance Fleet Services. PHH Arval leases 329,000 vehicles in the United States and another 294,000 oversees under various management arrangements.

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