Popular Inc. (BPOP) announced that Banco Popular de Puerto Rico, its principal banking subsidiary, has entered into an agreement to sell a portfolio of non-performing commercial and construction loans, and commercial and single-family real estate owned, with a combined unpaid principal balance on loans and appraised value of other real estate owned of $1.022 billion and book value of $568 million, to an entity majority owned by a joint venture between Caribbean Property Group LLC and certain affiliated funds of Perella Weinberg Partners Asset Based Value Strategy. The purchase price for the assets is equal to 34% of the unpaid principal balance of the loans and the appraised value of the other real estate owned as of the agreed cut-off date, approximately $347 million, adjusted for certain items.
As a result of the sale, Popular will reduce its non-performing assets by approximately 28 percent. The company expects the transaction to result in an after-tax loss of approximately $185 million, which will be recognized in the first quarter of 2013.
As consideration for the sale of the assets, Banco Popular will receive approximately $112 million in cash, a note for approximately $203 million as seller financing and a 24.9% equity interest in the purchasing entity.
The parties have agreed that no distributions of profits or return of capital may be made by the joint venture to its members until all the credit facilities have been paid in full and all commitments to lend are terminated.
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