PHH to Miss Another Deadline
Mortgage banking firm PHH (PHH) needs more time to get its financial affairs in order.
The firm, which was spun off last year by Cendant (CD), says it will miss the June 30 filing deadline for submitting financial statements for the second quarter. PHH previously missed the deadline for filing first-quarter financials and still hasn't filed its 2005 annual report.
The company says it's still reviewing "significant accounting adjustments" that were made in conjunction with the February 2005 spinoff. PHH says the delay in filing its financial statements has led it to obtain a number of waivers from its lenders.
PHH did not say what the waivers involved. But it's not uncommon for loans and corporate bonds to contain provisions that trigger an automatic default, in the event a company is delinquent in filing financial statements.The problems with PHH's financial affairs may explain why Cendant was unable to find a buyer for the mortgage business. Two years ago, as Cendant was actively shopping the mortgage firm, Countrywide Financial (CFC), Citigroup (C) and JPMorgan Chase (JPM) all passed on the deal. The inability of the real estate and travel conglomerate to unload PHH led it to opt for last year's spinoff. PHH, meanwhile, also said it has uncovered a number of "material weaknesses" in its financial reporting. The weakness were uncovered as part of the standard review that all companies must now undertake, since the passage of the Sarbanes-Oxley corporate reform law. "We intend to remediate any material weaknesses and other control deficiencies identified as promptly as possible,'' the company says. In morning trading, shares of PHH were down 20 cents to $25.86.
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