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Press release from Business Wire

SLM Preferred Shareholder Alert: Law Firm of Wohl & Fruchter Investigating Adverse Impact on SLM Preferred Shareholders of Spin-Off of Education Loan Management Business by SLM Corporation

Thursday, January 30, 2014

SLM Preferred Shareholder Alert: Law Firm of Wohl & Fruchter Investigating Adverse Impact on SLM Preferred Shareholders of Spin-Off of Education Loan Management Business by SLM Corporation

09:00 EST Thursday, January 30, 2014

NEW YORK (Business Wire) -- The law firm of Wohl & Fruchter LLP is investigating the proposed spin-off by SLM Corporation (SLM) (Nasdaq:SLM) of its lucrative education loan management business into a new public company to be owned entirely by existing SLM common shareholders. Our investigation focuses on the adverse impact of this spin-off on the rights of SLM's 6.97% cumulative redeemable preferred stock, Series A (Series A Preferred Stock), and SLM's floating rate non-cumulative preferred stock, Series B (Series B Preferred Stock).

On May 29, 2013, SLM announced a plan to separate into two distinct publicly-traded entities - an education loan management (ELM) business and a consumer banking business. The ELM business would consist primarily of portfolios of federally guaranteed (FFELP) and private education loans, as well as servicing and collection activities on these and other student loans, while the consumer banking business would consist primarily of Sallie Mae Bank and its private education loan origination and servicing business.

On December 6, 2013, SLM filed a Form 10-12B (Form 10) with the Securities & Exchange Commission (SEC) providing details concerning the proposed transaction, including the division of assets between the two new public entities. First, all outstanding common shares of SLM will be converted on a 1-to-1 basis into shares of SLM BankCo, a new publicly-traded company that will operate the consumer banking business. The ELM business will then be spun off into another new publicly-traded company (NewCo), and shares of NewCo will be issued on a 1-to-1 basis to existing SLM common shareholders.

The Series A and Series B Preferred Shares will be converted into identical series of preferred shares of SLM BankCo on a 1-to-1 basis. NewCo will not issue any preferred shares to Series A and Series B Preferred Shareholders. Thus, upon consummation of the proposed transaction, Series A and Series B Preferred Shareholders will no longer hold any interest in the ELM business being spun off to NewCo.

The pro forma financial statements included with the Form 10 demonstrate the unfairness of depriving Series A and Series B Preferred Shareholders of any future interest in the ELM business being spun off to NewCo. For example, pro forma income statements for the first nine months of 2013 indicate that had SLM BankCo and NewCo operated as separate entities during that timeframe, SLM BankCo's income would have been approximately $198 million, while NewCo's income would have been approximately $1.1 billion.

Moreover, a pro forma balance sheet dated as of September 30, 2013, indicates that of the $5.6 billion in equity capital of SLM as of that date, $3.9 billion will be transferred to NewCo.

In sum, Wohl & Fruchter's investigation concerns the unfairness of distributing SLM's most valuable businesses entirely to SLM common shareholders without adequately compensating SLM's Series A and Series B Preferred Shareholders for the loss of their interest in these businesses, and the resulting sharp increase in the risk profile of their securities.

SLM Series A and Series B Preferred Shareholders with questions about this investigation are invited to contact our Firm by calling 866.833.6245, or contact the attorney below.

Additional information, including a copy of the December 6, 2013 Form 10, is available at http://www.wohlfruchter.com/cases/slm-preferred.

About Wohl & Fruchter

Wohl & Fruchter LLP represents plaintiffs in litigation arising from fraud and other fiduciary breaches by corporate managers, as well as other complex litigation matters. Please visit our website, www.wohlfruchter.com, to learn more about our Firm.

This release may be deemed to constitute attorney advertising.

Wohl & Fruchter LLP
J. Elazar Fruchter, 845-425-4658
jfruchter@wohlfruchter.com
www.wohlfruchter.com

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