Centerbridge Buys into Capmark

HORSHAM, PA—Shares of Capmark Financial Group Inc. were up Thursday after the company announced a strategic investment by Centerbridge Partners LP. The agreement, which entails both an immediate investment as well as future stock purchases, is intended to bankroll acquisitions by Horsham, PA-based Capmark. The exact dollar amount of the deal was not disclosed.

Under terms of the agreement, New York City-based Centerbridge would make an immediate investment of $5 million in convertible preferred Capmark stock. Capmark would also issue five-year warrants for Centerbridge to buy 43 million shares of its stock at 110% of book value as Capmark completes acquisitions; Capmark currently has 100 million shares outstanding. Centerbridge would further agree to buy up to $100 million in aggregate principal amount of Capmark's seven-year subordinated floating rate PIK notes, the proceeds of which would also be used for acquisition purposes.

The agreement also entitles Centerbridge to elect a director to Capmark's board, and to increase its representation on the board as it makes additional equity investments in the company. Further, it will help Capmark in sourcing acquisitions.

“We believe there are numerous ways for Capmark to expand their business and generate additional shareholder value,” says Matthew Kabaker, senior managing director at Centerbridge. “We are looking forward to providing capital and expertise to help Capmark fully capitalize on these opportunities.”

On the advisory team for Capmark are Houlihan Lokey Capital Inc. as financial advisor and Kramer Levin Naftalis & Frankel LLP serving as legal counsel. Simpson Thacher & Bartlett LLP is counsel to Centerbridge, which had $20 billion of capital under management as of this past December. Capmark sold its loan origination and servicing business to Berkadia Commercial Mortgage in December 2009 and emerged from bankruptcy protection in the fall of 2011.