Hanover Capital Mortgage Holdings Announces Entry Into Definitive Agreement to Merge
Tuesday September 30, 7:03 pm ET


EDISON, N.J., Sept. 30 /PRNewswire-FirstCall/ -- Hanover Capital Mortgage Holdings, Inc. (Amex: HCM - News; the "Company" or "Hanover") announced today that on September 30, 2008, it had entered into a definitive agreement to merge with a subsidiary of Walter Industries, Inc. (NYSE: WLT - News; "Walter"), a leading producer and exporter of U.S. metallurgical coal for the global steel industry.



Walter plans to distribute 100 percent of its interest in its financing business, JWH Holding Company, LLC ("JWH Holding Company"), a wholly-owned subsidiary of Walter and parent company of Walter Mortgage Company and Jim Walter Homes, to its shareholders. Prior to this distribution, Jim Walter Homes will be sold or otherwise separated from JWH Holding Company and will not be part of the spin-off entity.

JWH Holding Company has entered into a definitive agreement to merge with Hanover, with Hanover continuing as the surviving corporation. The merger will occur immediately following the spin-off and is structured such that the combined company will continue to operate as a publicly traded real estate investment trust ("REIT"). The new company will be named Walter Investment Management Corporation ("Walter Investment Management").

"Throughout this period of upheaval in the mortgage and financial markets we have worked to find the best solution for the shareholders and employees of Hanover. We believe that this is a great opportunity for all to move forward with the Walter transaction. Walter Mortgage Company brings a strong balance sheet and track record to the combined companies." said Hanover's Chairman and Chief Executive Officer, John A. Burchett.

Following the merger, the Board of Directors of the surviving corporation will be comprised of seven directors divided into three classes, with six directors designated by JWH Holding Company and one director designated by Hanover, who is currently expected to be John Burchett, Hanover's current President and Chief Executive Officer. Following the merger, Mark J. O'Brien, current Chief Executive Officer of JWH Holding Company, will become Chairman and Chief Executive Officer of the surviving corporation and Charles E. Cauthen, currently President of Walter Mortgage Company, will become the surviving corporation's President and Chief Operating Officer. Mr. John Burchett and Ms. Irma Tavares, Hanover's current Chief Operating Officer, will serve in a senior management capacity at the surviving corporation with an initial focus on generating fee income through HCP2, Hanover's principal taxable REIT subsidiary.

Following the merger, it is expected that the new company will be headquartered in Tampa, Fla.

The spin-off and merger are expected to be completed in early 2009. The transaction is anticipated to occur in three steps: the first, a spin-off of JWH Holding Company, is expected to be a tax-free stock distribution to Walter's shareholders. The second step will be a taxable distribution of stock and cash from JWH Holding Company to its shareholders and the third step would be a merger between JWH Holding Company and Hanover. These actions will be executed in immediate succession at closing.

The taxable distribution is required to comply with certain Internal Revenue Service ("IRS") requirements for REITs. After the spin-off, taxable distribution and merger, Walter's shareholders will own approximately 98.5 percent of Walter Investment Management's publicly traded common stock. Shareholders of Hanover will own the remaining 1.5 percent. Walter Investment Management plans to apply to list its shares on the American Stock Exchange.