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MERGER | 6 Months Ended
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Jun. 30, 2015
MERGER |
MERGER | 2. MERGER The Merger Agreement provided for the business combination of CIM REIT's wholly owned subsidiary, CIM Urban, and PMC Commercial. Pursuant to the Merger Agreement, an affiliate of CIM REIT received 4,400,000 shares of newly-issued PMC Commercial Common Stock and approximately 65,000,000 shares of newly-issued PMC Commercial preferred stock. Following the Merger and subsequent increase in our authorized number of shares, each share of preferred stock was converted into 1.4 shares of PMC Commercial Common Stock, resulting in the issuance of 95,440,000 shares of common stock in the aggregate in connection with the Merger, representing approximately 97.8% of PMC Commercial's outstanding shares of common stock. All shares of PMC Commercial Common Stock that were outstanding immediately prior to the closing of the Merger continued to remain outstanding following the Acquisition Date. In addition, stockholders of record of PMC Commercial at the close of the business day prior to the Acquisition Date received a special cash dividend of $27.50 per share of common stock plus that pro-rata portion of PMC Commercial's regular quarterly cash dividend accrued through the Acquisition Date, each of which was paid on March 25, 2014. The Merger was accounted for as a reverse acquisition under the acquisition method of accounting with CIM Urban considered to be the accounting acquirer based upon the terms of the Merger Agreement. Based on the determination that CIM Urban was the accounting acquirer in the transaction, CIM Urban allocated the purchase price to the fair value of PMC Commercial's assets and liabilities as of the Acquisition Date. Accordingly, the accompanying financial statements include (1) the historical financial information for CIM Urban for all periods presented, (2) the assets and liabilities of PMC Commercial acquired on March 11, 2014 and still owned or held by us in the consolidated balance sheet as of December 31, 2014 and June 30, 2015, respectively, and (3) the results of PMC Commercial's operations and cash flows in the consolidated statements of operations and comprehensive income and cash flows from the Acquisition Date. The equity of CIM Commercial is the historical equity of CIM Urban retroactively restated to reflect the number of shares of stock issued by PMC Commercial pursuant to the Merger Agreement. In connection with the reverse acquisition, for purposes of presenting equity for CIM Commercial, the historical stockholders of PMC Commercial were deemed to have been issued 2,119,244 shares of Common Stock (2,226,509 shares of Common Stock, less 107,265 shares of treasury stock) on the Acquisition Date. Consideration Transferred—The fair value of the consideration transferred in the reverse acquisition is determined based on the number of shares of stock the accounting acquirer would have to issue to the stockholders of the accounting acquiree in order to provide the same ratio of ownership in the combined entity following the completion of the Merger, and was determined to be the outstanding stock of PMC Commercial as of the Acquisition Date. The fair value of the consideration transferred was based on the most reliable measure, which was determined to be the market price of PMC Commercial stock as of the Acquisition Date. The computation of the fair value of the consideration transferred, based on the market price of PMC Commercial stock on the Acquisition Date, is as follows:
|  | (in thousands, except per share data) |
PMC Commercial common stock outstanding |  |  | 2,119 |
Equity consideration price per share of common stock |  | $ | 21.05 |
​ | ​ | ​ | ​ | ​
Fair value of the equity consideration |  |  | 44,610 |
Payment in cash—special dividend |  |  | 58,279 |
​ | ​ | ​ | ​ | ​
Total purchase price |  | $ | 102,889 |
​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​
Purchase Price Allocation—As CIM Urban was the accounting acquirer in the business combination, it has allocated the purchase price to PMC Commercial's individually identifiable assets acquired and liabilities assumed based on their estimated fair values on the Acquisition Date. A bargain purchase gain was recorded as of the Acquisition Date in the amount equal to the excess of the fair value of the identifiable net assets acquired over the total purchase price. The following table summarizes the allocation of the purchase price:
|  | (in thousands) |
Assets |  |  |  |
Cash and cash equivalents |  | $ | 3,185 |
Loans receivable |  |  | 207,140 |
Accounts receivable and interest receivable |  |  | 755 |
Other assets |  |  | 5,396 |
Intangible assets |  |  | 2,957 |
​ | ​ | ​ | ​ | ​
Total assets acquired |  |  | 219,433 |
​ | ​ | ​ | ​ | ​
Liabilities |  |  |  |
Debt |  |  | 99,849 |
Accounts payable and accrued expenses |  |  | 7,396 |
Special dividend liability and dividend payable |  |  | 59,286 |
Other liabilities |  |  | 3,374 |
​ | ​ | ​ | ​ | ​
Total liabilities assumed |  |  | 169,905 |
​ | ​ | ​ | ​ | ​
Net identifiable assets acquired |  |  | 49,528 |
Bargain purchase gain |  |  | (4,918 | )
​ | ​ | ​ | ​ | ​
Net purchase price |  | $ | 44,610 |
​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​
In order to allow CIM Commercial to increase its focus on Class A and creative office properties, our board of directors (the "Board of Directors") approved a plan for the lending business that, when completed, will result in the deconsolidation of the lending segment. As a result, the lending segment was held for sale at June 30, 2015 and December 31, 2014 (see Note 6). For the three and six months ended June 30, 2014, Merger related costs of $0 and $468,000, respectively, were included in transaction costs.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References No definition available. + Details
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