May 4, 2009
VIA EDGAR AND FED EX
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Mellissa Campbell Duru, Esq.
Special Counsel
Office of Mergers and Acquisitions
Securities and Exchange Commission
100 F Street, N.E.
Washington D.C. 20549-3628
Re: PHH Corporation, Inc. - Revised Preliminary Proxy Statement on
Schedule 14A filed April 22, 2009 by Pennant Capital Management, LLC
(File No. 1-07797) and Amendment No. 9 to Schedule 13D filed on March
9, 2009 by Alan Fournier and Pennant Capital Management, LLC (File No.
5-13543)
Dear Ms. Duru:
On behalf of Pennant Capital Management, LLC, Pennant Spinnaker Fund LP,
Pennant Offshore Partners, Ltd., Pennant Onshore Partners, LP, Pennant Onshore
Qualified, LP, Pennant Windward Fund, LP, Pennant Windward Fund, Ltd., Alan
Fournier, Allan Z. Loren, Gregory J. Parseghian (collectively the "Soliciting
Persons"), we have filed today an amendment (the "Revised Preliminary Proxy
Statement") to the Preliminary Proxy Statement filed under cover of Schedule 14A
by the Soliciting Persons on April 1, 2009, as amended April 22, 2009 (the
"Prior Filing"), relating to PHH Corporation (the "Company"). Enclosed
supplementally with this letter are three clean copies of the Revised
Preliminary Proxy Statement and three redlined copies of the Revised Preliminary
Proxy Statement showing the changes that were made to the Prior Filing.
The following are the Soliciting Persons' responses to your letter of May
1, 2009 containing the Staff's comments regarding the Prior Filing and Amendment
No. 9 to Schedule 13D filed on March 9, 2009 by Alan Fournier and Pennant
Capital Management, LLC. For your convenience, the full text of each of the
Staff's comments is set forth below in bold type, and the Soliciting Persons'
response to each comment directly follows the applicable text. Defined terms
used in this letter without definition have the meanings ascribed to them in the
Revised Preliminary Proxy Statement.
Mellissa Campbell Duru, Esq.
Special Counsel
Securities and Exchange Commission
May 4, 2009
Page 2
Cover Letter
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1. We disagree that you have provided sufficient support in response to prior
comment 2. The supporting materials highlight only one case study for Mr.
Loren and do not provide support for the statement as it pertains to Mr.
Parseghian.
We have revised the Prior Filing (Revised Preliminary Proxy Statement at
pages 2 and 5) to specify that Mr. Parseghian would bring to the PHH board
"substantial mortgage industry experience" and that Mr. Loren would bring
to the PHH board "a proven track record of creating stockholder value and
implementing change as chief executive officer of a well-known public
company." Based on our identifying for each of the Independent Nominees the
specific traits to which we refer, and our making clear that it is Mr.
Loren's record as a CEO to which we refer, we believe we have revised the
statement in response to prior comment 2 so that adequate support has been
provided. We believe it is clear from the Independent Nominees' resumes
included in the Revised Preliminary Proxy Statement that Mr. Parseghian has
substantial mortgage industry experience and that Mr. Loren has served as
CEO only of D&B. In addition, we believe the case study previously provided
in response to prior comment 2 provides a reasonable basis for Pennant's
belief that Mr. Loren would bring to the PHH board a proven track record of
creating stockholder value and implementing change as chief executive
officer of a well-known public company.
Biographical Information Regarding the Independent Nominees, Page 9
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2. To the extent you choose to highlight the success your nominees have had at
prior companies, revise to highlight the difficulties they have experienced
as well. We note for example that there is insufficient disclosure
regarding the problems with and performance of Freddie Mac under the
stewardship of Mr. Parseghian, particularly in light of the facts
surrounding his removal from the board of Freddie Mac. Additionally,
insufficient disclosure has been provided regarding the performance of
other companies that Mr. Loren is or has been affiliated with, such as Foot
Locker and Fair Issac Corporation. See Rule 14a-9. Please remove the
statement regarding the "proven track record of creating stockholder value"
or in the alternative, provide support for the statements you make.
As indicated above in response to comment 1, we have revised the Prior
Filing (Revised Preliminary Proxy Statement at pages 2 and 5) to
significantly narrow how we have chosen to highlight the success our
nominees have had at prior companies. As to Mr. Parseghian, we now refer
only to his substantial mortgage industry experience. As to Mr. Loren, we
now refer only to his success in his role as chief executive officer of
D&B, which, as his resume indicates, is the only company at which he was
CEO.
Mellissa Campbell Duru, Esq.
Special Counsel
Securities and Exchange Commission
May 4, 2009
Page 3
Background of this Solicitation, Page 3
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3. Please refer to response 3. Your reference to conversations between parties
does not provide sufficient objective support for the conclusion that the
earnings call was "reckless and damaging." Please revise or delete the
statement.
In reference to the November 10, 2008 earnings call (Revised Preliminary
Proxy Statement at page 5), we have changed the words "reckless and
damaging" to "poorly handled." We believe the support included in our
response to prior comment 3 provides a reasonable basis for Pennant's
belief that the earnings call was poorly handled.
Reasons for this Solicitation, Page 5
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4. We note your response to prior comment 8. A substantial portion of the
supporting documents are excerpts or descriptions of conversations or
presentations made by the company. Please confirm your understanding that
referring to another person's statements or reports does not insulate you
from the requirement to comply with Rule 14a-9.
Pennant confirms its understanding that referring to another person's
statements or reports does not insulate it from the requirement to comply
with Rule 14a-9.
5. We reissue portions of prior comment 8. We disagree that adequate support
has been provided for conclusions you make regarding the inadequacy of the
incentive compensation plans and the Board and management's failure to
focus on the profitability of individual clients. Revise your disclosure
accordingly.
We have revised the Prior Filing (Revised Preliminary Proxy Statement at
pages 6 and 11) so as not to refer to the Company's management incentive
plans as ineffective or as not providing proper incentives. We have changed
the language to indicate that the incentive targets are based on
significant factors outside of employees' control and to indicate Pennant's
belief that the management incentive plans therefore do not provide optimal
incentives for employees.
We have revised the Prior Filing (Revised Preliminary Proxy Statement at
page 7) so that it simply questions whether the Company had focused, until
recently, on the profitability of individual clients, without asserting
that the Company had failed to do so. The text continues to refer to the
Company's own suspicion that some of its clients were insufficiently
profitable, and Pennant believes this, along with the remainder of
Pennant's response to the relevant portion of prior comment 8, provides a
reasonable and sufficient basis to raise this question.
Mellissa Campbell Duru, Esq.
Special Counsel
Securities and Exchange Commission
May 4, 2009
Page 4
6. It is not apparent that you have provided support for the assertion that
the current depressed market valuation reflects a dim view of the company's
stewardship by the Board. The support you provide is based on the statement
by Mr. Edwards that the run off value of the company is equivalent to
tangible book value. From this statement, you conclude that the market's
valuation reflects a dim view of the company's stewardship. The additional
support you provide (i.e. the analyst's statement) also seems to support
the analyst's views as opposed to the general market. Accordingly, please
delete the statement or revise to provide adequate support.
We have deleted this statement. (Revised Preliminary Proxy Statement at
page 6)
Public Communications Failures, Page 7
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7. We partially reissue prior comment 13. Provide the support for the
statements you include in the revised proxy which suggest a link between
alleged communication failures of management and the company's depressed
market valuation. Alternatively, remove the statements.
We have deleted these statements. (Revised Preliminary Proxy Statement at
pages 7 and 8)
Schedule 13D/A filed March 9, 2009
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8. Please provide information regarding the control persons of Pennant Capital
and the relationship between Pennant Capital and Pennant GP. Specifically,
tell us whether Pennant GP has beneficial ownership of shares held by each
of the funds. Refer to Rule 13d-3(a).
Alan Fournier is the sole controlling person of Pennant Capital and the
sole controlling person of Pennant GP. Pennant Capital and Pennant GP are
therefore "sister" entities, and neither controls or has an ownership
interest in the other.
Pennant GP, as the general partner of the four domestic Funds managed by
Pennant Capital, may be deemed to beneficially own the shares of Common
Stock held by those four domestic Funds. As discussed below in response to
comment 9 and in response to prior comment 27, Pennant GP does not
beneficially own the shares of Common Stock held by the offshore Funds.
Accordingly, as indicated in the response to prior comment 27, Pennant GP
beneficially owned, as of the date of the Prior Filing, 4.05% of the
outstanding Common Stock as a result of its beneficial ownership of the
shares held by the four domestic Funds. As a result of rebalancing trades
effected by Pennant Capital among the six Funds on May 1,
Mellissa Campbell Duru, Esq.
Special Counsel
Securities and Exchange Commission
May 4, 2009
Page 5
2009, the four domestic Funds increased their interests slightly and
Pennant GP therefore beneficially owns today 4.15% of the Common Stock
outstanding. These latest trades and the beneficial ownership changes of
the Funds are reflected in Appendices A and B to the Revised Preliminary
Proxy Statement.
9. We note your response to prior comment 27. Please reconcile the statement
that Pennant GP "is the general partner of the four Funds...," with the
subsequent statement that Pennant GP "is not related to either of the two
offshore funds..."
As indicated above in response to comment 8, Pennant Capital and Pennant GP
are both controlled by Alan Fournier, but neither Pennant Capital nor
Pennant GP controls or has an ownership interest in the other. Pennant
Capital advises six Funds, four of them domestic and two of them offshore.
Pennant GP is the general partner of the four domestic Funds but has no
direct relationship with either of the offshore Funds.
Indirectly, of course, Pennant GP and the two offshore Funds are "related"
in that they are "affiliates" by virtue of Mr. Fournier's common control of
them through his direct control of Pennant GP and his indirect control
(through Pennant Capital) of the offshore Funds. This indirect relationship
between controlled affiliates has no bearing on the question whether
Pennant GP beneficially owns any of the Common Stock held by the Funds,
which was the context of the response to prior comment 27.
* * * * *
Please contact me if we can provide any additional information or
clarification with respect to this revised submission.
Very truly yours,
/s/ Michael A. Schwartz
Michael A. Schwartz