18 Institutional Investors In RMBS Issued By Citigroup Announce Binding Offer
By Citigroup To Four RMBS Trustees To Settle Mortgage Repurchase Claims For 68
HOUSTON, April 7, 2014
HOUSTON, April 7, 2014 /PRNewswire/ -- Today, 18 institutional investors
represented by Gibbs & Bruns LLP ("Institutional Investors") announced they
have reached an agreement with Citigroup ("Citi") under which Citi will make a
binding offer ("Offer") to the Trustees of 68 RMBS Trusts issued by Citi to
settle mortgage repurchase claims. The Institutional Investors support the
agreement and have asked the Trustees to accept it. The Trusts included in
the Offer are listed on Exhibit "A."
The Trustees will have until June 30, 2014 to accept the Offer, which may be
extended pursuant to the terms of the Offer for an additional forty-five
days. The Offer includes the following key terms:
1.Payment by Citi of $1.125 billion in cash to the Trusts to settle mortgage
2.Reimbursement to the Trustees of expenses associated with their evaluation
of the Offer; and
3.A release of all repurchase claims that have been or could have been
asserted by the Trusts.
The Institutional Investors who are parties to the agreement are:
oBlackRock Financial Management Inc.
oCascade Investment, L.L.C.
oFederal Home Loan Bank of Atlanta
oFederal Home Loan Mortgage Corporation
oGoldman Sachs Asset Management, L.P.
oING Investment Management LLC
oInvesco Advisers, Inc.
oKore Advisors, L.P.
oMetropolitan Life Insurance Company
oPacific Investment Management Company LLC
oSealink Funding Limited
oTeachers Insurance and Annuity Association of America
oThe Prudential Insurance Company of America
oThe TCW Group, Inc.
oThrivent Financial for Lutherans
oWestern Asset Management Company
The agreement is subject to regulatory approval by FHFA and acceptance of the
Offer by the Trustees. Pursuant to the agreement, the Institutional Investors
have requested that the Trustees accept the Settlement. The Institutional
Investors have also agreed to use their reasonable best efforts to obtain
court approval of the settlement, if the Trustees elect to accept the Offer
and seek a judicial instruction concerning their decision to do so.
Attorneys' fees for the Institutional Investors' counsel, Gibbs & Bruns, will
be paid in addition to—and not out of—the Settlement Payment upon the latter
of the Trustees' Acceptance or Final Court Approval, if a judicial instruction
Q: Who are the parties to the settlement?
Citi has made a binding Offer to the RMBS Trustees of all of the RMBS
Trusts listed on Exhibit "A." The Trustees who have received the offer
are: Deutsche Bank National Trust Company, HSBC Bank USA, N.A., U.S. Bank
A: N.A., and Wells Fargo Bank, N.A., and/or separate or successor trustees for
the RMBS Trusts appointed pursuant to court orders confirming their
appointment or otherwise appointed. The Offer is being made pursuant to an
agreement between Citi and the Institutional Investors.
Q: What Trusts are involved in the proposed settlement?
A: There are 68 Trusts involved in the settlement. They are listed on Exhibit
Q: What was the role of the 18 Institutional Investors?
The Institutional Investors, through their Steering Committee and their
counsel, led the settlement negotiations. The Institutional Investors did
not negotiate on behalf of the Trustees and the Trustees were not parties
A: to the negotiations that led to the Offer. The Institutional Investors
have requested that the Trustees enter into the settlement and will appear
in court to support the settlement, should the Trustees elect to seek a
judicial instruction concerning their decision to accept a settlement.
Q: Will the Institutional Investors benefit differently than other investors
under the settlement?
No, they will not. Upon the latter of the Trustees' Acceptance or Final
Court Approval, the Settlement Payment will be allocated by the Trustees'
expert among the RMBS Trusts based on each Trust's then current and future
A: expected collateral losses. Each RMBS Trust's allocable share of the
settlement payment will flow down its payment waterfall in accordance with
the governing documents for that Trust. The Institutional Investors will
participate in the settlement, like every other investor, based on the
terms of the payment waterfall.
Q: Will individual investors' securities claims be released in this
No, they will not. The settlement pertains only to the Trusts' repurchase
claims. The Offer states specifically that, "The releases and waivers in
Article III do not include any direct individual claims for securities
fraud or other alleged disclosure violations ("Disclosure Claims") that an
A: Investor may seek to assert based upon such Investor's purchase or sale of
Securities." Citi has reserved the right to assert that any payment made
or benefit conferred under the settlement constitutes an offset or credit
against or a reduction in the gross amount of an Investor's Disclosure
Q: How will the Trustees assess whether to accept the Offer?
The Trustees have until June 30, 2014 to conduct a reasonable investigation
A: of the settlement and its terms. They may request a forty-five day
extension of this evaluation period under the terms of the Agreement.
The Trustees may request documents or other information from Citi to
conduct such diligence, may retain experts to assist them, and may conduct
such other due diligence as they deem necessary to inform themselves
concerning the Settlement. Citi has agreed to use its reasonable best
efforts to provide the Trustees promptly with the documents they reasonably
require for their due diligence.
Q: Will the Trusts pay the costs of the Trustees' evaluation of the
No. Pursuant to the Offer, Citi will pay all reasonable and
A: non-duplicative costs, fees and expenses the Trustees incur to evaluate the
settlement, the claims it resolves, and its terms. This payment will be on
top of, not out of, the $1.125 billion cash settlement payment.
Q: When and how will the settlement payment be distributed?
The settlement payment will be distributed pursuant to a formula based on
each accepting Trust's percentage share of total realized and unrealized
losses. The timing of payment is not certain, as it depends upon a number
A: of factors including: a) whether the Trustees accept the settlement, b)
whether the Trustees elect to seek a judicial instruction concerning their
decision to accept the settlement, and c) whether Final Court Approval, if
sought, is granted.
Q: What is the allocation formula?
The settlement agreement specifies that the Trustees will retain a single
financial expert to determine the then current and future expected net
A: losses that have been and are expected to be borne by that Trust from its
inception to its expected date of termination as a percentage of the sum of
all such losses that are expected to be borne by all of the RMBS Trusts
over the same time period.
Q: How can interested investors learn more about the settlement?
All investors will receive a notice from the relevant Trustee(s) concerning
A: the settlement terms. Information will also be available on a
settlement-related website that will be created shortly.
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