The situation for Ocwen Asset Investment Corp. (OAI) could be improving now that the company has accepted a $95.8 million takeover offer from Ocwen Financial Corp.

OAI operates as a real estate investment trust, but invests solely in distressed credits - policy that has resulted in significant financial difficulties for the company over the past year and triggered the need for a capital infusion.

The takeover by Ocwen should help remedy some of the problems, according to sources close to the companies. However, they added, if a deal is consummated, OAI will lose its REIT status.

OAI officials declined to discuss any strategy for the company once the transaction is finalized since details on such matters will be disseminated in proxy materials likely to be released early in the fourth quarter. Shareholders are scheduled to vote on the takeover plan in late October.

As part of the sale, Ocwen will pay 0.71 a share of its common stock for each outstanding OAI share, for a valuation of $95.8 million. In April, Ocwen offered 0.57 of a share to buy OAI.

OAI's assets are divided into three separate areas, distressed real estate; mezzanine loans, bridge loans and construction loans; and commercial and residential mortgages.

While sources would not discuss the plans Ocwen would have for OAI's assets, they noted that Ocwen itself is committed to moving away from securitizations and to conducting more conventional financings. - David Feldheim

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