UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): April 7, 2014
WMI Holdings Corp.
(Exact Name of Registrant as Specified in Its Charter)
| Washington | 001-14667 | 91-1653725 | ||
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(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
1201 THIRD AVENUE, SUITE 3000 98101
SEATTLE, WASHINGTON
(Address of Principal Executive Offices) (Zip Code)
(206) 432-8887
(Registrant’s Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01. Entry into a Material Definitive Agreement
On April 3, 2014, WM Mortgage Reinsurance Company, Inc. (“WMMRC”), a wholly-owned subsidiary of WMI Holdings Corp. (the “Company”), and United Guaranty Residential Insurance Company (“United Guaranty”) entered into a Commutation Agreement and Mutual Release (the “Commutation Agreement”), a copy of which is attached as Exhibit 10.1 and is incorporated herein by reference. Pursuant to the Commutation Agreement, WMMRC and United Guaranty agreed to the commutation and termination of the (i) trust and trust account (the “Trust Account”) established by that certain trust agreement dated December 31, 1998 between WMMRC, United Guaranty and US Bank, National Association, as trustee (the “Trust Agreement”), pursuant to which WMMRC established a Trust Account for the benefit of United Guaranty, in order to secure obligations of WMMRC and (ii) the reinsurance agreements and related arrangements described more specifically in the Commutation Agreement (the “Commutation”). In accordance with the terms of the Commutation Agreement and upon the consummation of the Commutation, United Guaranty will be paid $17,700,646.00 in cash and WMMRC will be paid all remaining cash and assets remaining in the Trust Account, which as of the date of this Form 8-K, is estimated to be approximately $65.4 million (the “WMMRC Amount”) from the Commutation.
The effectiveness of the Commutation Agreement and the consummation of the Commutation thereunder is subject to a number of conditions including obtaining all necessary consents, approvals and waivers including the approval of the Commutation by the State of Hawaii, Insurance Division, approval of the requisite holders of 13% Senior First and Second Lien Notes issued by the Company pursuant to the Indentures, dated March 19, 2012 and approval of the requisite lenders under the Company’s Financing Agreement, dated March 19, 2012 ( the “ Financing Agreement”). In the event these conditions are not satisfied, the Commutation Agreement will be null and void. The “Indentures” mean: (a) the Senior First Lien Notes Indenture dated as of March 19, 2012 by and between the Company and Wilmington Trust, National Association, as trustee (“First Indenture Trustee”) (the “First Lien Indenture”) and (b) the Senior Second Lien Notes Indenture dated as of March 19, 2012 by and between the Company and Law Debenture Trust Company of New York, as Trustee (“Second Indenture Trustee”) (the “Second Lien Indenture”).
The State of Hawaii, Insurance Division has approved the Commutation Agreement and the Company is seeking to enter into Limited Waiver Agreements with the First Indenture Trustee and Second Indenture Trustee in order to permit the Commutation under the terms of the First Lien Indenture and Second Lien Indenture. WMI Liquidating Trust, the holder of at least two-thirds in aggregate principal amount of the notes outstanding under the First Lien Indenture and the Second Lien Indenture, has consented to the limited waiver under the First and Second Lien Indentures. The Company is also seeking to enter into a Consent Agreement with the lenders and agent under the Financing Agreement in order to permit the Commutation under the Financing Agreement.
Provided that the necessary consents, approvals and waivers are obtained and following the consummation of Commutation, the WMMRC Amount will be deposited into WMMRC’s custodial account. WMMRC requested and received approval from, the State of Hawaii, Insurance Division to declare a dividend or distribution of all or a portion of the WMMRC Amount to the Company. Upon consummation of the Commutation and after we have obtained the necessary consents and waivers, the Company will deposit such dividend or distribution to the extent constituting Runoff Proceeds (as defined in the Indentures) directly into the Collateral Account (as defined in the Indentures) for distribution to the note holders in accordance with the Indentures.
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Item 1.02 Termination of a Material Definitive Agreement.
Under the Commutation Agreement and upon consummation of the Commutation, the parties to the Commutation Agreement will be released from all liabilities and obligations under (i) the Trust Agreement, by and between United Guaranty, as beneficiary, WMMRC, as grantor and U.S. Bank, National Association, as trustee and (ii) the reinsurance and related arrangements, described more specifically in the Commutation Agreement (the “Reinsurance Agreements”) and the Trust Agreement and Reinsurance Agreements will be terminated.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits:
| 10.1 | Commutation Agreement and Mutual Release entered into on April 3, 2014 by and between United Guaranty Residential Insurance Company and WM Mortgage Reinsurance Company, Inc. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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WMI HOLDINGS CORP. (Registrant) |
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| Date: April 7, 2014 | By: |
/s/ Charles Edward Smith |
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| Name: | Charles Edward Smith | |||
| Title: | Interim Chief Executive Officer | |||
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EXHIBIT INDEX
| 10.1 | Commutation Agreement and Mutual Release entered into on April 3, 2014 by and between United Guaranty Residential Insurance Company and WM Mortgage Reinsurance Company, Inc. |
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Exhibit 10.1
COMMUTATION AGREEMENT
AND MUTUAL RELEASE
This Commutation Agreement and Mutual Release (the “Agreement”), by and between United Guaranty Residential Insurance Company, an insurance company organized under the laws of North Carolina (“United Guaranty”), and WM Mortgage Reinsurance Company, Inc., an insurance company organized under the laws of Hawaii (“Reinsurer”), is entered into as of February 28, 2014. The parties to the Agreement shall be referred to collectively as the “Parties” and individually as a “Party”.
WHEREAS, the Parties entered into the following reinsurance agreements (each, a “Reinsurance Agreement” and collectively, the “Reinsurance Agreements”):
| 1. | No. 3-93, effective August 1, 1999, as amended; |
| 2. | No. 3-93B, effective January 1, 2002, as amended; |
| 3. | No. 3-58, effective January 1, 1998, as amended; |
| 4. | No. 3-46, effective January 1, 1998, as amended; and |
| 5. | No. 3-46B, effective January 1, 2002, as amended; |
whereby United Guaranty agreed to cede to Reinsurer and Reinsurer agreed to assume from United Guaranty certain insurance risks in exchange for the payment by United Guaranty of certain reinsurance premiums to Reinsurer; and
WHEREAS, in connection with the Reinsurance Agreements, the Parties and US Bank, National Association (the “Trustee”), entered into a trust agreement dated December 31, 1998 (“Trust Agreement”), pursuant to which Reinsurer established a trust account (the “Trust Account”) for the benefit of United Guaranty in order to secure the obligations of Reinsurer under the Reinsurance Agreements; and
WHEREAS, United Guaranty and Reinsurer wish to fully and finally settle and commute all rights, obligations and liabilities, known and unknown, of Reinsurer and United Guaranty under the Reinsurance Agreements and Trust Agreement, to terminate the Reinsurance Agreements and Trust Agreement in their entirety, and fully and finally settle, discharge and release any and all of each of their respective liabilities, rights, duties and obligations under the Reinsurance Agreements and Trust Agreement;
NOW, THEREFORE, in consideration of this commutation, the mutual promises herein contained and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound, the Parties hereto mutually agree as follows:
| 1. |
Subject to obtaining the consents, waivers and approvals set forth in Paragraph 11 and as soon as practicable thereafter, the Parties shall direct the Trustee to terminate the Trust Account and the Trust Agreement and to take all steps necessary to liquidate all assets in the Trust Account into cash and pay to United Guaranty, as soon as practicable after such notification, a cash amount equal to seventeen million seven hundred thousand and six hundred and forty-six dollars (US $17,700,646.00) (the “Commutation Amount”) from |
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| the Trust Account, in commutation, payment and full and final satisfaction of all amounts owed, owing, or which may be owing, at any time to United Guaranty regarding, in connection with, and/or arising under the Reinsurance Agreements or Trust Agreement; provided, however, that the Parties agree that Reinsurer shall have the right to designate which assets in the Trust Account shall be liquidated in order to effect the payment of the Commutation Amount to United Guaranty. Reinsurer acknowledges and agrees that, notwithstanding any contrary provision of the Trust Agreement, the Commutation Amount may be used by United Guaranty and applied for any legitimate purpose. Reinsurer shall remain responsible for payment to the Trustee of such compensation and fees as may be due to the Trustee through the date of termination of the Trust Agreement. In connection with the payment of the Commutation Amount United Guaranty shall direct the Trustee to pay to Reinsurer all remaining cash and assets in the Trust Account (the “Remainder Amount”) contemporaneously with the remittance to United Guaranty of the Commutation Amount and United Guaranty acknowledges and agrees that, notwithstanding any contrary provision of the Trust Agreement, the Remainder Amount may be used by the Reinsurer and applied for any legitimate purpose. |
| 2. | Upon execution of this Agreement and after satisfaction of all conditions and requirements set forth in Paragraph 11, United Guaranty and Reinsurer hereby declare and agree that the Reinsurance Agreements are terminated and shall be fully and finally commuted with no further action required by either Party hereto, and the Parties shall have no further rights, obligations, duties, and/or liabilities to each other under, or in any way related to, the Reinsurance Agreements or the Trust Agreement. In consideration of this commutation, no other payment for losses, loss adjustment expenses, premiums or other sums shall ever be owing to United Guaranty or Reinsurer in connection with the Reinsurance Agreements or Trust Agreement. |
| 3. | Reinsurer and United Guaranty further agree that, upon satisfaction of all conditions and requirements set forth in Paragraph 11, the Parties shall deliver to the Trustee a joint written notice of their intention to terminate the Trust Agreement, which notice shall be in the form and substance reasonably satisfactory to the Parties and shall include a copy of this executed Agreement . United Guaranty and Reinsurer hereby expressly waive the notice provision of Section 10 of the Trust Agreement and authorize the Trustee to terminate the Trust Agreement immediately, in accordance with this Commutation Agreement. United Guaranty and Reinsurer shall execute a Notice of Termination and any other documentation reasonably requested by the Trustee or required by the Trust Agreement as soon as reasonably practicable to effect such termination and to effectuate the liquidation and release of the Trust Assets to United Guaranty, as further described in Paragraph 1 above. |
| 4. |
Reinsurer, on behalf of itself and its Affiliates, and their respective predecessors, successors, assigns, shareholders, officers, directors, employees and agents (collectively with Reinsurer, the “Reinsurer Releasors”), for good and valuable consideration given, hereby forever releases, acquits and discharges United Guaranty, its predecessors, successors, assigns, Affiliates, subsidiaries, and parent companies, and their respective shareholders, officers, directors, employees, and agents (collectively with United Guaranty, the “United Guaranty Releasees”), of and from any and all past, present and future liabilities and obligations arising out of, related to, on account of, growing out of, |
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| under or relating in any way to the Reinsurance Agreements or the Trust Agreement, whether written or oral, known or unknown, reported or unreported, and whether previously existing, currently existing or arising in the future, whether grounded in law or equity, in contract or in tort, including, but not limited to, all actions, causes of action, suits, arbitral proceedings, premiums, dues, debts, claims, sums of money, covenants, contracts, controversies, agreements, reckonings, bonds, bills, promises, doings, omissions, costs, offsets, duties, damages, judgments, arbitrations, mediations, expenses, adjustments, accounts, executions, losses and demands whatsoever in law or equity, contract or in tort, which any of the Reinsurer Releasors now have, claim to have, or may in the future have against any of the United Guaranty Releasees under the terms, provisions, endorsements, addenda, conditions of, or otherwise arising out of, related to, on account of, growing out of, under or relating in any way to, the Reinsurance Agreements or the Trust Agreement, provided however, that this release does not discharge obligations of United Guaranty that have been undertaken or imposed by the terms of this Agreement. As used in this Agreement, “Affiliate” means, with respect to a Party or entity, a person or entity that, directly or indirectly, is controlled by, controls, or is under common control with, that Party or entity. |
| 5. | United Guaranty, on behalf of itself and its Affiliates, and their respective predecessors, successors, assigns, shareholders, officers, directors, employees and agents (collectively with United Guaranty, the “United Guaranty Releasors”), for good and valuable consideration given, hereby forever releases, acquits and discharges Reinsurer, its predecessors, successors, assigns, Affiliates, subsidiaries, and parent companies, and their respective shareholders, officers, directors, employees, and agents (collectively with Reinsurer, the “Reinsurer Releasees”), of and from any and all past, present and future liabilities and obligations arising out of, related to, on account of, growing out of, under or relating in any way to the Reinsurance Agreements or the Trust Agreement, whether written or oral, known or unknown, reported or unreported, and whether previously existing, currently existing or arising in the future, whether grounded in law or equity, in contract or in tort, including, but not limited to, all actions, causes of action, suits, arbitral proceedings, premiums, dues, debts, claims, sums of money, covenants, contracts, controversies, agreements, reckonings, bonds, bills, promises, doings, omissions, costs, offsets, duties, damages, judgments, arbitrations, mediations, expenses, adjustments, accounts, executions, losses and demands whatsoever in law or equity, contract or in tort, which any of the United Guaranty Releasors now have, claim to have, or may in the future have against any of the Reinsurer Releasees under the terms, provisions, endorsements, addenda, conditions of, or otherwise arising out of, related to, on account of, growing out of, under or relating in any way to, the Reinsurance Agreements or the Trust Agreement, provided however, that this release does not discharge obligations of the Reinsurer that have been undertaken or imposed by the terms of this Agreement. |
| 6. | In the event that any party shall bring an action to enforce the terms of this Agreement or to declare rights hereunder, the prevailing party in any such action, shall be entitled to costs and reasonable attorneys’ fees to be paid by the non-prevailing party as fixed by a court of appropriate jurisdiction, including, but not limited to, reasonable attorneys’ fees and court costs incurred in courts of original jurisdiction, bankruptcy courts and appellate courts. |
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| 7. | This Agreement constitutes the entire agreement among the parties pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings of the parties in connection herewith. No modification of this Agreement shall be binding upon a party unless in writing and signed by the party against whom enforcement is sought. In the event of any conflict between the terms of the Reinsurance Agreements or the Trust Agreement and this Agreement, the provisions of this Agreement shall supersede and prevail. |
| 8. | Except as otherwise provided herein, the terms and conditions of this Agreement shall be kept confidential by the Parties and neither Party may disclose the terms and conditions of this Agreement to any third party without the prior written consent of the other Party or as may be required by law and/or in compliance with a subpoena after giving reasonable notice to the other Party (to the extent that such notice is permitted by law). Notwithstanding the above, the foregoing prohibition on disclosure shall not prevent Reinsurer from making such disclosures as are necessary or appropriate upon advice of counsel to comply with Federal and state securities laws or from disclosing the terms and conditions of this Agreement to the parties identified in Paragraph 11 for purposes of obtaining the necessary consents, waivers and approvals. In addition, the foregoing prohibition shall also not apply to necessary disclosures to: (i) the Trustee as set forth in Paragraphs 1 and 3 above; (ii) independent auditors, accountants, actuaries, consultants and attorneys of either Party and the captive management representative of Reinsurer; (iii) any state or federal regulator pursuant to its regulations or demands; or iv) any Government Sponsored Enterprise. |
| 9. | This Agreement shall be binding upon, and inure to the benefit of, the Parties hereto, their respective successors and permitted assigns and their liquidators and rehabilitators. Neither Party may assign this Agreement, or any of its rights or obligations hereunder, without the prior written consent of the other Party. All notices, requests, demands and other communications under this Agreement must be in writing and will be deemed to have been duly given or made as follows: (a) if sent by registered or certified mail in the United States return receipt requests, upon receipt; (b) if sent by reputable overnight air courier two business days after mailing; (c) if sent by facsimile transmission, with a copy mailed on the same day in the manner provided in (a) or (b) above, when transmitted and receipt is confirmed by telephone; or (d) if otherwise actually personally delivered, when delivered, and shall be delivered as follows: |
| a. | If to United Guaranty: |
United Guaranty Residential Insurance Company
230 North Elm Street, Greensboro, NC 27401
Attention: John Gaines
| b. | If to the Reinsurer: |
WM Mortgage Reinsurance Company, Inc.
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1201 Third Avenue, Suite 3000
Seattle, WA 98101
Facsimile 206-432-8879
Attention: Peter L. Struck
With a copy to:
Ms. Lynn Saito
Vice President, Captive Solutions
Marsh Management Services, Inc.
745 Fort Street, Suite 1100
Honolulu, HI 96813
| 10. | The Parties represent that they enter into this Agreement freely, voluntarily and at arms-length, in reliance on their own judgment, belief, and knowledge and with and upon the advice of counsel of their own choice and that the person executing this Agreement on behalf of the Party has the necessary and appropriate authority to do so; that neither Party has notice of any pending action, agreements, transactions, or negotiations to which it is a party or is likely to be made a party that would render this Agreement or any part thereof void, voidable, or unenforceable; and any authorization, consent, or approval of any governmental entity, required to make this Agreement valid and binding has been obtained. |
| 11. | The Parties agree that this Agreement shall not be effective unless and until all necessary approvals, consents and waivers are obtained from (a) the requisite Holders of the 13% Senior First and Second Lien Notes issued by WMI Holdings Corp. pursuant to Indentures dated March 19, 2012, (b) the requisite Lenders of the WMI Holdings Corp. Financing Agreement dated March 19, 2013, and (c) the State of Hawaii Insurance Department. In the event any of such consents, waivers and approvals, as the case may be, are not obtained, this Agreement shall be null and void. (Capitalized terms in sections (a), (b), and (c) of this paragraph refer to the capitalized terms defined in the specific agreements referenced.) |
| 12. | This Agreement and the legal relations between the parties shall be governed by and construed in accordance with the laws of the State of North Carolina. |
| 13. | Any capitalized terms not specifically defined in this Agreement are defined in the Reinsurance Agreements or Trust Agreement. |
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| 14. | This Agreement may be executed in counterparts, each of which shall be deemed an original, and the counterparts shall constitute but one and the same instrument which shall be sufficiently evidenced by any one counterpart. |
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IN WITNESS WHEREOF, UNITED GUARANTY and Reinsurer have caused this Agreement to be executed by their respective duly authorized representatives indicated below.
| UNITED GUARANTY RESIDENTIAL INSURANCE COMPANY | ||||||||||||
| By: |
/s/ John E. Gaines |
Date: |
4/2/14 |
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| Print Name and Title: |
John E. Gaines, SVP |
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| By: |
/s/ Jason H. Hanflick |
Date: |
4/2/14 |
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| Print Name and Title: |
Jason H. Hanflick, AVP |
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| WM MORTGAGE REINSURANCE COMPANY, INC. | ||||||||||||
| By: |
/s/ Charles Edward Smith |
Date: |
4/3/14 |
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| Print Name and Title: |
Charles Edward Smith, President |
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| By: |
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Date: |
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| Print Name and Title: |
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