![]() The acquisition is expected to close in the third quarter. "It's a good fit for both parties," he said. ![]() ![]() The deal with Lone Star allows Accredited greater financial ability to hold loans, as opposed to having to sell them at distressed levels, said analystĪt Fox-Pitt, Kelton. Like many subprime lenders, Accredited was forced to sell loans cheap - even at a loss - to raise funds to cover margin calls. Accredited obtained a $200 million loan from Farallon in late March the financing pact followed an announcement by Accredited to sell about $2.7 billion of loans at a substantial discount. In March, hedge fund Farallon Capital Management LLC, which reported a 6.9% stake in Accredited Home, said it held talks with Accredited about acquiring the lender. "In Lone Star, we have found a partner who has a record of helping companies like ours successfully address financial and operational challenges." "We believe this agreement is the best alternative available to protect shareholder value and provide the capital we need to support the company's business over the long-term," saidĬhairman and chief executive of Accredited. The company - viewed by analysts as one of the stronger independent lenders because of its relatively prudent underwriting policies - saw its shares plummet to a 52-week low of $3.77 in March, after disclosing its funding challenges amid the broader struggles of an industry plagued by rising delinquencies on loans made to high-risk borrowers. Lone Star Fund V LP, part of Lone Star Funds, will pay shareholders of San Diego-based Accredited $15.10 a share, a 9.7% premium to its closing price of $13.76 Friday, the last business day before the announcement of the deal. White said, could become interested in acquiring mortgage operations from those private-equity firms - when the market sentiment turns for the better. Many bought lenders last year to complement their business of repackaging mortgage loans for sale and have been busy integrating them.Ĭommercial banks, on the other hand, largely have stayed out of the bidding for subprime lenders, given the heightened regulatory scrutiny of lending to people with poor or limited credit. While the private-equity firms increasingly are looking for subprime bargains, investment banks have been snapping up subprime targets so they can expand their own operations.
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