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Hubzu operator Altisource Portfolio Solutions is raising money for the second time this year by issuing more common stock, an announcement that initially sent the company’s share price dipping to a new all-time low in after-hours trading Thursday before rebounding when more details of the offering were made public Friday.
On Friday, Altisource disclosed in a regulatory filing that it hopes to net $15.8 million from the offering of 4.86 million shares, which were priced at $3.60 to the public and $3.384 for the underwriters of the deal. In a press release, Altisource said the deal underwriters will have a 30-day option to purchase up to 729,166 shares of common stock at the public offering price, less underwriting discounts and commissions.
The Luxembourg-based real estate and mortgage services provider, which also manages but does not own the Lenders One Cooperative, had previously raised $20.5 million in a February offering of 4.55 million shares that it used to pay down debt.
If underwriters exercise their option to purchase additional shares, the offering will total 5.59 million shares, increasing the number of shares outstanding by nearly 27 percent. But that did not seem to faze investors, with Altisource disclosing that it intends to use the proceeds of the offering to repay $10 million in debt and “for general corporate purposes.”
Altisource’s share price rebounds
Shares in Altisource Portfolio Solutions (ASPS) rebounded Friday after the company released information about the pricing of its latest public offering. Source: Yahoo Finance.
Shares in Altisource, which have changed hands for as much as $17.67 and as little as $3.52 in the last year, dipped as low as $3.02 in after-hours trading Thursday. After opening at $4 Friday morning, shares briefly dipped to a low for the day of $3.80 before rebounding to well over $4.
In a separate regulatory filing, Altisource revealed that it’s cut nearly 400 positions this year, and plans to trim $13.5 million from the company’s annual expenses, after racking up a $4.1 million net loss in July.
Bill Shepro
“Altisource continues to execute on its strategy to recover from the impact of the pandemic,” Chairman and CEO Bill Shepro said in a statement.
Altisource said it employed 1,100 full-time workers as of Aug. 31, down from 1,496 at the end of last year (including 1,142 based in India, 279 in the U.S., 66 in Uruguay, and nine in Luxembourg, according to the company’s most recent annual report).
“Based upon our progress in the third quarter, we estimate that we will generate $1.0 million per month of expense savings for the month of Sept. 2023,” Shepro said.
He said the company expects to at least break even during the third quarter by one measurement — adjusted earnings before interest, tax, depreciation and amortization (EBITDA) — and to have positive adjusted EBITDA for the fourth quarter and full year.
Altisource had previously reported an $18.9 million second-quarter net loss, with revenue down 12 percent from the same quarter a year ago to $33.2 million. That brought the company’s net loss for the first half of the year to $31.7 million, following a $53.4 million 2022 net loss.
As of June 30, Altisource reported $217.9 million in long-term debt, down 11 percent from the $245.2 million it owed at the end of last year. The company also reported $59.8 million in current assets, including $35 million in cash.
“Since last quarter, we’ve won business that we estimate will generate $18.6 million of annual revenue on a stabilized basis,” Shepro said in a July 27 earnings announcement. “This includes a July win of $12.8 million from a new asset management client that we estimate will generate $3 million to $5 million per year in adjusted EBITDA across Hubzu and most of our other default solutions. During the quarter, we continued to onboard and grow sales wins from 2022 and 2023, which combined are now at a $13 million annualized revenue run rate.”
Altisource provides solutions to mortgage loan servicers and real estate investors that include property preservation and inspection services, title and settlement services, real estate valuation services, foreclosure trustee services, and residential and commercial construction inspection and risk mitigation services.
Its marketplace business includes the Hubzu online real estate auction platform and real estate auction, real estate brokerage, and asset management services.
The company’s tech offerings for loan servicers and real estate investors include:
- Equator, a platform for managing real estate owned (REO) properties, short sales, foreclosure, bankruptcy and eviction processes
- REALHome Services and Solutions, a national real estate brokerage specializing in institutional sellers and buyers
- RentRange, a single-family rental data, analytics and rent-based valuation solution
- REALSynergy, a commercial loan-servicing platform
- NestRange, an automated valuation model and analytics solution
On the mortgage origination side, Altisource manages the Lenders One Cooperative and provides title and settlement services, real estate valuation services, loan fulfillment, certification and certification insurance services.
Altisource’s tech offerings for mortgage originators include:
- Vendorly, a vendor management platform
- Lenders One Loan Automation (LOLA), a marketplace to order services and a tool to automate loan originations
- TrelixAI, workflow automation for the loan fulfillment, pre- and post-close quality control and service transfer processes.
On Aug. 30, Altisource announced it had signed six new Equator customers: Dawson’s Realty & Mortgages Inc., FlippingUSA, Scottsdale REI LLC (which does business as Scottsdale Mortgage Investments) and three other unnamed companies.
Editor’s note: This story has been updated to include pricing information on Altisource Portfolio Solutions’ offering published Friday, and the rebound in the company’s share price.
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