On April 10, Nelnet agreed to purchase a total of $3.6 billion of Federal Family Education Loan Program (“FFELP”) student loans and related assets from CIT Group.
The transaction, which was disclosed in a regulatory filing Wednesday, includes the purchase of residual interests in a total of $2.6 billion of securitized student loans and related assets under a stock purchase agreement, and the purchase of a total of approximately $950 million of unsecuritized student loans under three separate loan sale agreements.
Nelnet anticipates that the transaction will close on or before April 25, 2014.
The assets to be acquired under the stock purchase agreement include the rights to the residual interests in three FFELP student loan securitization trusts, which hold a total of $2.6 billion of FFELP student loans and related assets and have issued a corresponding amount of related student loan asset-backed debt.
In addition, under the loan sale agreements, Nelnet will purchase unsecuritized FFELP loans totaling approximately $950 million, consisting primarily of FFELP consolidation loans, which will initially be funded through the company’s existing student loan warehouse facilities.
The aggregate purchase price for the assets to be acquired under the stock purchase agreement and the amount to be paid over the par value of the student loan portfolio and related accrued interest under the loan sale agreements is $139 million. It will be funded from the company’s operating cash and unsecured line of credit.
Nelnet expects the yield on the $3.6 billion of FFELP loans acquired from this transaction will be consistent with the variable student loan spread earned on the company’s existing FFELP loan portfolio.
All student loan assets and related debt will be included in the Company’s consolidated financial statements and will increase the company’s student loan portfolio to more than $29 billion.