Investment firm Two Harbors agrees to pay a sum of $375 million to settle legal disputes with Pine River.
Two Harbors Investment Corporation (TWO) has announced a significant settlement that resolves all disputes with Pine River Capital Management LP. The settlement, worth $375 million, will bring an end to all litigation related to the termination of a management agreement between the two parties.
In a statement, Two Harbors President and CEO Bill Greenberg said, "The resolution of this matter is an important development for the company."
The settlement payment will be funded through a combination of cash on hand and available borrowing by Two Harbors. Despite the settlement payment, the company assures its investors that it will continue to have ample liquidity post-settlement.
The news of the settlement has had an impact on Two Harbors' stock, with it sliding 3.8% in after-hours trading following the announcement.
The new subservicing relationship was seeded by the sale by Two Harbors of approximately $20B unpaid principal balance in mortgage servicing rights on a servicing-retained basis. This move has increased Two Harbors' third-party subservicing business to $31B UPB, or approximately 138,000 loans.
In a positive development, Two Harbors signed a term sheet with a new subservicing client during Q3, contributing to the growth of its subservicing business.
After adjusting for the settlement payment, Two Harbors estimates its book value as of August 15 at approximately $11.06 per common share. Meanwhile, Two Harbors Investment Corporation had estimated its book value was approximately $12.73 per common share as of August 15, 2025, representing a total economic return of ~4.9% compared to June 30, 2025.
In exchange for the payment, Pine River will relinquish all ownership claims to intellectual property used by Two Harbors. This agreement marks a clean break between the two parties, allowing both to focus on their respective business operations.
The settlement is a significant event for Two Harbors, bringing closure to a long-standing dispute and paving the way for future growth. As the company continues to expand its subservicing business and maintain its financial stability, investors will be keeping a close eye on its progress.
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