CVHL CV Holdings Inc (PK)

NEEDHAM, Mass., Aug. 5, 2013 /PRNewswire/ -- Realty Finance Corporation ("Company," "we," "us" or "our")  (Other OTC: RTYFZ.PK) today announced that it successfully closed on a merger transaction (the "Merger") with ClearVue Management, Inc. ("CV"), a California-based private real estate investment company started in 2007 that specializes in the acquisition, stabilization and disposition of distressed/non-performing residential real estate loans across the United States. We will move our headquarters to Newport Beach, CA and will change our name to CV Holdings, Inc.  The total value of the Merger was approximately $26 million, which consisted of securities and a promissory note as further described below.  After the Merger, we will be primarily focused on continuing CV's business of purchasing and managing pools of residential distressed/non-performing loans (NPL). The management of the Company believes that the acquisition of CV will allow the Company to become a leading operator in the NPL business.  CV has a successful track record, a strong management team with over 90 years combined experience, and has raised approximately $90 million of equity to date to purchase over 1,650 loans with an aggregate unpaid principal balance of approximately $300 million.

The Merger

As part of the Merger, we issued a total of 6,549,125 shares of our common stock, warrants to purchase up to an aggregate of 3,764,322 shares of our common stock, $2,935,000 of new 8% perpetual preferred stock and a new 4% $5,000,000 non-recourse note.  For purposes of the Merger, our common stock was valued by the parties at $0.39, a 218% premium to the average trading price of the stock in 2013 and a 203% premium to the average trading price in the 30 days prior to the close of the Merger. After the Merger, we will have a fully-diluted share count, including all outstanding options and warrants, of 45,833,310 shares.  Also of note, the Merger transaction did not require the payment of cash to any party.

We have re-located our headquarters to Newport Beach, CA.  Messrs. Matt Regan, Dennis Regan, David Haddad and Jonny Harmer, who comprised CV's senior management, will become our Executive Vice Presidents.  Ricardo Koenigsberger and Kenneth Witkin, who have been serving as our directors, will continue to serve in such capacity and will become our Co-CEOs.  Our new Board of Directors will initially include four directors: Messrs. David Haddad, Ricardo Koenigsberger, Matt Regan and Kenneth Witkin.

Our focus will be to leverage CV's experience and track record in the NPL business, together with our pro forma cash of $6,089,000 and our senior management team's experience in real estate, capital markets, banking and private equity, to not only continue the existing business, but also to implement a longer-term plan taking advantage of various synergistic opportunities, which may arise from the existing business model.

Our Board of Directors (the "Board") unanimously approved the Merger as it believed it to be in best interests of our shareholders.  During the past two years, our Board considered a variety of transactions. After careful consideration of all factors including: (i) the significant premium of our common stock over the current trading price in the Merger, (ii) the potential for a business platform to provide our growth, as well as an organic way to utilize our NOL asset, and (iii) the attractiveness of the structure, which did not require us to make any cash outlay, our Board concluded that the Merger was in the best interest of our shareholders.  In its analysis of alternatives, our Board further considered not only alternative transactions but also a liquidation scenario, which, given the ongoing obligations related to our CDO's, our Board determined was inferior to the Merger. We conducted significant diligence on the Merger and also obtained a fairness opinion by an independent financial advisory firm, experienced in both real estate and financial matters.  After conducting their own analysis of the Merger, the independent financial advisory firm concluded that the Merger was fair to our shareholders.

Concurrent with the closing of the Merger, we gave notice to Waldron H. Rand & Company, P.C. who has been providing asset management and financial services to us, of our intent to terminate our agreement effective August 31, 2013. The work currently performed by Waldron Rand will be assumed by our employees on a going forward basis. Under our agreement with Waldron Rand, there is no termination fee due to Waldron Rand.

About ClearVue Management, Inc.

CV's strategy has consisted primarily of purchasing portfolios of NPLs.  CV manages the loss mitigation process and works with qualified homeowners to restructure the loan(s) and/or monetize the asset(s). Through 12/31/2012, CV has raised capital for 25 funds to purchase 25 portfolios of NPLs and REOs totaling over 1,650 homes across 45 states, representing a total unpaid principal balance of approximately $300 million.

Management Discussion

Concurrent with the closing of the Merger, Ricardo Koenigsberger and Kenneth Witkin will become Co-CEOs. CV's founders and principals, Dennis Regan, Matt Regan and David Haddad will become Executive Vice Presidents of the Company and will continue their respective operating roles prior to the transaction. Jonny Harmer, CV's CFO will also become an Executive Vice President of the Company and will become our CFO.

About Realty Finance Corporation/CV Holdings Corporation

Prior to the Merger, we were a commercial real estate, specialty finance company primarily focused on managing a diversified portfolio of commercial real estate-related loans and securities. After the Merger, in addition to performing our obligations in connection with our legacy assets in commercial real estate, we will be primarily focused on growing our newly-acquired residential non-performing loan business.

Our common stock is currently quoted on the OTC Markets Group, or OTC Markets.  While not a requirement, the OTC Markets encourages companies having their securities quoted thereon to provide adequate current information in accordance with its disclosure guidelines.  We will evaluate the need to issue press releases containing information similar to such information disclosed herein.  There is no assurance that we will provide timely periodic disclosures or at all.

We elected to qualify as a real estate investment trust, or REIT, for U. S. federal income tax purposes commencing with the taxable year ended December 31, 2005. We intend to continue to qualify as a REIT. As a REIT, we generally will not be subject to U. S. federal income tax on that portion of our income that we distribute to our stockholders if we continue to qualify as a REIT, including distributing at least 90% of our annual "REIT taxable income" to our stockholders. We conduct our operations so as to not be or become regulated as an investment company under the Investment Company Act of 1940. We have not had any taxable income since 2007 and we do not expect to have any taxable income in the foreseeable future.

Forward-Looking Information

This press release contains forward-looking statements based upon the Company's beliefs, assumptions and expectations of its future performance, taking into account all information currently available. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to the Company or are within its control. If a change occurs, the Company's business, financial condition, liquidity and results of operations may vary materially from those expressed in its forward-looking statements. The factors that could cause actual results to vary from the Company's forward-looking statements include: the successful integration of the business, personnel and management of CV into the Company's business and operations, the Company's ability to continue to cover its operating cash requirements; the success of the Company's interest in the Marriott Waikiki, the risk factors included as part of the Company's Annual Report on Form 10-K for the period December 31, 2008 filed on March 16, 2009; the Company's future operating results; its business operations and prospects; whether the Company can execute a strategic alternative; general volatility of the securities market in which the Company invests and the market prices of its common stock; the effect of trading on the OTC Markets; availability, terms and deployment of short-term and long-term capital; availability of qualified personnel and directors; changes in the industry; interest rates; the debt securities, credit and capital markets, the general economy or the commercial finance and real estate markets specifically; performance and financial condition of borrowers and corporate customers; any future litigation that may arise; the ultimate resolution of the Company's numerous defaulted loans; the state of the Company's joint venture investments; the ability to continue as a going concern; availability of liquidity; and other factors, which are beyond the Company's control. The Company undertakes no obligation to publicly update or revise any of the forward-looking statements.  For further information, please refer to the Company's previous periodic filings with the Securities and Exchange Commission.  However, the Company is no longer a Securities and Exchange Commission reporting company as of March 16, 2009 and therefore, such information is not current and circumstances have changed significantly since the date of such filings.

Pro forma Financial Information

Below are: (i) six month year to date summary income statement and balance sheet for RFC and CV, (ii) 2012 fiscal year end summary income statements and balance sheets for RFC and CV and (iii) pro forma presentations for both. The financial statements below were not prepared in accordance with GAAP, have not been audited, and are provided herein solely for illustrative purposes.  The pro forma adjustments are also not prepared in accordance with GAAP, but are merely adjustments the Company felt are reflective of pro forma results.

SOURCE Realty Finance Corporation