MRU HOLDINGS Inc. (OTC:MHOI)
Industry: Services
MRU Holdings, Inc., incorporated in March 2000, is a specialty finance company that profiles and provides students with funds for higher education using a blend of market credit practices, as well as its own analytic models and decision tools. The Company offers three financial products to students and financial institutions participating in the specialty finance educational lending sector. These products include private alternative student loans; guarantees for students with certain credit challenges, such as the lack of a co-signor or as a foreign resident seeking credit support to obtain domestic educational financing while attending school in the United States, and student loans originated by MRU Holdings on behalf of other lenders. The Company will generate revenues from referral or sale of federal loans, origination fees and guaranty fees, residual cash flows from the sale or securitizations of portfolios of its alternative student loans and interest surcharges related to its guarantees of student loans. On July 8, 2004, the Company completed a share exchange (Share Exchange) with the stockholders of Iempower, Inc., a corporation doing business as MyRichUncle (Iempower), pursuant to which it acquired 100% of the outstanding capital stock of Iempower in exchange for 6,863,433 shares of its common stock. Although MRU Holdings acquired Iempower as a result of the Share Exchange, the stockholders of Iempower hold a majority of the Company's voting interests. Private Student Loans Private student loans supplement financing for qualified students beyond what they can obtain through the government and are not guaranteed by the government. To facilitate this product, MRU Holdings has established the Student Loan Credit Facility with Nomura, which it anticipates will provide all of the financing it estimates will be required. The Company plans to originate loans and warehouse these loans. It is anticipated that these loans will then be either sold to loan purchasers, or to other larger financial institutions, or may be securitized. MRU Holdings expects to derive revenues from an origination fee generated upon the execution of the loan and its share of residual cash flows generated through the securitization or sale of the loans. Revenues from the sale of loans can either be paid upon the sale of the loan or paid over time in the form of a residual. Securitizations can provide the Company with residual cash flows that are paid over time. However, if MRU Holdings receives residuals that are paid over the life of the loan, accounting rules allow the Company to book the net present value of the revenues in the period that the sale or securitization occurred. Loan Guaranties Through its subsidiary, MRUG, the Company intends to guarantee loans provided by third-party lenders to students with particular credit challenges. MRU Holdings plans to enable students, with or without co-signors, to have their loans guaranteed if they meet its credit index requirements. It is anticipated that students will pay fees to the Company for this service, which includes an upfront guaranty fee and an annual interest surcharge over the life of the loan. MRU Holdings plans to support MRUG with equity raised by the sale of MRUG preferred stock to Universal Finanz Holding AG. Subject to the execution of definitive documentation, Universal Finanz Holding AG has committed to invest up into MRUG to serve as the equity reserve against which MRUG will guaranty loans. Revenues generated from the guaranty fees and surcharges will be divided between Universal Finanz Holding AG and MRUG with Universal Finanz Holding AG receiving 65% and MRUG receiving the remainder. Universal Finanz Holding AG will hold preferred stock in MRUG equal to 65% of the ownership interest in MRUG on a diluted basis. Federal Loans MRU Holdings intends to refer students' federal loan needs to other lenders. The Company receives a premium from such lenders for funded applications. MRU Holdings expects, at the appropriate time, to originate federal loans that it wil
As Of: 10/07 00:00 ET
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