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10/18/2017

Radian Improves Financial Flexibility, Strengthens Capital Structure and Provides Update on Restructuring of Services Business

-- Improves financial flexibility with $225 million unsecured revolving credit facility --

-- Strengthens capital structure, improving debt maturity profile and reducing cash interest payments --

-- Completes strategic review of Services segment, repositioning segment for sustained profitability --

PHILADELPHIA--(BUSINESS WIRE)--Oct. 18, 2017-- Radian Group Inc. (NYSE: RDN) today provided an update on three strategic actions designed to strengthen the company’s financial position, improve its debt maturity profile, grow sustainable revenues and profitability in its Mortgage and Real Estate Services business, and increase stockholder value. These three actions are outlined below:

  • On October 16, 2017, Radian entered into a three-year, $225 million unsecured revolving credit facility with a panel of banks led by Royal Bank of Canada and U.S. Bank. Borrowings under the credit facility may be used for working capital and general corporate purposes, including, without limitation, capital contributions to Radian’s insurance and reinsurance subsidiaries as well as growth initiatives. Terms of the credit facility include an option to increase the capacity during the term of the agreement, up to a total of $300 million.
  • On September 26, 2017, Radian completed its public offering of $450 million principal amount of 4.500% Senior Notes due 2024, and announced the early tender results and upsizing of its tender offers to purchase for cash a portion of its 5.500% Senior Notes due 2019, its 5.250% Senior Notes due 2020, and its 7.000% Senior Notes due 2021. These transactions will reduce the company’s annual cash interest by approximately $4.3 million and extend the weighted average maturity of its outstanding debt by nearly two years. The company has no material debt maturities prior to June 2019.

Radian Chief Financial Officer Frank Hall commented, “The combination of our successful notes offering, tender offer and credit facility substantially increases Radian’s financial flexibility while decreasing our cost of debt over the long term. We believe the strong participation in our notes offering and the successful execution of our credit facility reflects the market’s appreciation for Radian’s financial strength and earnings growth.”

  • On August 1, 2017, the company announced that, based on the recent underperformance below expectations for its Services segment, it was undertaking a strategic review and planned restructuring of this business. The objective for the restructuring is to reposition the segment for sustained profitability by focusing on the core products and services that Radian believes have higher growth potential, produce more predictable and recurring fee-based revenues, and better align with customer needs. The company has committed to a restructuring plan and currently expects to incur pretax charges of approximately $12 million in the third quarter of 2017, including approximately $5 million in cash. Additional pretax charges of approximately $8 million, including approximately $7 million in cash, are expected to be recognized within the next 12 months. The total charges of approximately $20 million are expected to consist of approximately $8 million in asset impairments, approximately $7 million in employee severance and benefit costs, approximately $3 million in facility and lease termination costs, and approximately $2 million in contract termination and other restructuring costs. As part of the restructuring plan, Radian has eliminated the position of president of the Services business. As a result, Jeff Tennyson will step down from the role effective immediately. Through November 11, 2017, Tennyson will assist with the Services segment management transition.

“We are committed to transforming Radian into an even more cohesive and profitable company. Our actions demonstrate strategies that are designed to establish a solid foundation for broader reach and growth,” said Radian Chief Executive Officer Rick Thornberry. “The restructuring of our Services business has required us to make difficult decisions related to our team, and we do not take these decisions lightly. I am personally thankful for the contributions of Jeff Tennyson, and all who helped build and shape our companies. As we look to the future, we expect our restructuring plan to re-position our Services business for profitability and make our entire company stronger.”

ABOUT RADIAN

Radian Group Inc. (NYSE: RDN), headquartered in Philadelphia, provides private mortgage insurance, risk management products and real estate services to financial institutions. Radian offers products and services through two business segments:

  • Mortgage Insurance, through its principal mortgage insurance subsidiary Radian Guaranty Inc. This private mortgage insurance helps protect lenders from default-related losses, facilitates the sale of low-downpayment mortgages in the secondary market and enables homebuyers to purchase homes more quickly with downpayments less than 20%.
  • Mortgage and Real Estate Services, through its principal services subsidiary Clayton, as well as Green River Capital, Red Bell Real Estate and ValuAmerica. These solutions include information and services that financial institutions, investors and government entities use to evaluate, acquire, securitize, service and monitor loans and asset-backed securities.

Additional information may be found at www.radian.com.

FORWARD-LOOKING STATEMENTS

All statements in this press release that address events, developments or results that we expect or anticipate may occur in the future are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Exchange Act and the U.S. Private Securities Litigation Reform Act of 1995. In most cases, forward-looking statements may be identified by words such as “anticipate,” “may,” “will,” “could,” “should,” “would,” “expect,” “intend,” “plan,” “goal,” “contemplate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “seek,” “strategy,” “future,” “likely” or the negative or other variations on these words and other similar expressions. These statements, which may include, without limitation, projections regarding our future performance and financial condition, are made on the basis of management’s current views and assumptions with respect to future events. Any forward-looking statement is not a guarantee of future performance and actual results could differ materially from those contained in the forward-looking statement. These statements speak only as of the date they were made, and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. We operate in a changing environment where new risks emerge from time to time and it is not possible for us to predict all risks that may affect us. The forward-looking statements, as well as our prospects as a whole, are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements. These risks and uncertainties include, without limitation: the Company’s ability to successfully implement the restructuring plan as currently anticipated; restructuring charges being different from those estimated, including changes in the size and components of the expected costs and charges associated with the restructuring as well as unanticipated charges not currently contemplated that may occur as a result of the restructuring; changes in the planned timing of the restructuring, including the timing of plans for implementing the reductions in workforce; and disruption in our business associated with the restructuring plan and related activities.

Source: Radian Group Inc.

Radian Group Inc.
Emily Riley, 215-231-1035
emily.riley@radian.com