Sherman Financial Management in $518 Million Acquisition of Controlling Stake in Sherman Financial

Cleary Gottlieb represented senior management of Sherman Financial Group LLC in connection with the acquisition by management-led Sherman Capital, L.L.C. of a 34.7% stake in Sherman Financial from joint venture partners Radian Group Inc. and Mortgage Guaranty Insurance Corporation for approximately $277.9 million and $240.8 million respectively. In addition, Radian and MGIC are each entitled to a contingent payment based on the profitability of Sherman Financial. The deal closed on September 19.

Following the acquisition, management owns 54.0% of Sherman Financial. Radian also entered into an option agreement with management under which management may purchase Radian’s remaining interest in Sherman Financial at any time over the next year.

Cleary Gottlieb also represented Sherman Capital in connection with related acquisition financing.

Sherman Financial is the largest buyer of distressed consumer debt in the United States and a single-source provider of debt recovery solutions for financial institutions, credit card companies, retailers and others.