PHH deal in doubt over financing

PHH Corp., a mortgage lender that agreed to be bought by General Electric Co. and Blackstone Group, said Monday that the $1.8-billion sale could unravel because of difficulty financing the acquisition.

JPMorgan Chase & Co. and Lehman Bros. Holdings Inc. told Blackstone that the investment banks might fall $750 million short in funding the private equity giant’s part of the deal, PHH said in a statement. GE, which plans to keep the company’s vehicle-leasing unit, may pull out if Blackstone can’t get financing.

Mount Laurel, N.J.-based PHH’s shares fell $4.26, or 15%, to $24.24 on the news, their biggest drop since PHH went public in 2005.

Representatives of Blackstone, JPMorgan and Lehman declined to comment.

GE spokesman Stephen White said the conglomerate hoped that New York-based Blackstone “would succeed in arranging its financing so the merger can be completed,” but if it couldn’t, “GE will not be obligated to complete the merger.”

Some banks are seeking to renege on lending commitments for smaller leveraged buyouts while sticking with big deals such as Kohlberg Kravis Roberts & Co.’s $26-billion takeover of First Data Corp.

“There will be some deals that won’t get done, but it won’t be the big names,” said billionaire financier Wilbur Ross.