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Banned
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ace, if a private equity fund decides to buy a bankrupt company that cannot sell it's loans because of the increasing defaults of the loans it is already responsible for....a bankrupt company that recently obligated itself to a new, $213 million debt that is owed on top of the offer for outstanding shares, a bankrupt company that has delayed the filing of it's financials for more than three months, and of it's annual report for at least that long, a bankrupt company that lost it's auditor ten weeks ago, over "going concern" reservations by that auditor (concerns that the company ran a high risk of not being able to continue operations due to it's financial circumstances)....does that make a convincing case (especially since there has been no public disclosure...this year of Accredited Home's finances) that the subprime and Alt-A mortgage crisis, and the housing valuation decline that it aggravates....is somehow mitigated?
<center><img src="http://attheselevels.com/uploads/PJL051107.PNG"></center><br>
I don't think so....and we'll have to wait and see if this $400 million + $213 million debt to Farallon Capital "purchase" of Accredited Home (stock symbol LEND) actually happens, or not.....Did you read anywhere that Lone Star's offer is not contingent upon due dilligence, since Accredited Home has not filed any financial reports with the SEC for it's 1st qtr or it's annual report?
Quote:
http://www.sdbj.com/industry_article...74&aID2=113576
Posted date: 5/21/2007
Shareholders Trying to Divine the Future Course of Accredited Home Lenders
WebSideStory Changes Name to Visual Sciences
By MIKE ALLEN
San Diego Business Journal Staff
Subprime mortgage lender Accredited Home Lenders continues to stay afloat, but for how long or whether it survives is hard to decipher.
In the meantime, the business is taking a hard line on reducing expenses by cutting 1,300 workers to lower employment to 2,900.
The information was contained in a securities filing May 11 that said Accredited would not file its 10-Q first-quarter financial report on time.
Earlier this year, Accredited said it was unable to file its annual 10-K report by the deadline, and hired a new accounting firm to complete its annual audit.
Rick Howe, Accredited’s spokesman, said he couldn’t reveal where the cuts were made.
As of late February, Accredited said it had 4,200 employees, including 718 at its corporate headquarters in Carmel Mountain Ranch. Accredited also has an operations center in nearby Rancho Bernardo.
Mortgage banks that specialize in subprime lending, or to borrowers with blemished credit histories, have been in upheaval since February, when some announced steep increases in problem loans.
Accredited announced in a year-end, unaudited report in February that 8.26 percent of its portfolio was delinquent by more than 30 days, up from 5.45 percent in delinquencies as of Sept. 30.
In its May 11 filing, Accredited reported problem loans past due more than 30 days, including foreclosed and real estate owned, made up 8.96 percent of its $9.1 billion portfolio as of March 31.
That means $815.4 million in loans are delinquent.
Because the market for selling its loans on the secondary market is so poor, and margins are razor thin, Accredited is making and selling fewer loans. As a result, the company said in the filing that it “anticipates a significant loss in the quarter.”
On the positive side, Accredited said it had more than $350 million in cash as of March 31, compared with $300 million as of March 2006.
A good chunk of that came from a $230 million term loan from Farallon Capital Management, a hedge fund that also owns 8 percent of Accredited’s stock.
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Quote:
http://www.bloomberg.com/apps/news?p...bC0&refer=home
Accredited Agrees to $400 Million Buyout by Lone Star (Update3)
By Bradley Keoun
June 4 (Bloomberg) -- Accredited Home Lenders Holding Co., the subprime mortgage lender that raised doubts about its survival, will be sold to private-equity firm Lone Star Funds for about $400 million in cash.
Lone Star Fund V LP agreed to pay $15.10 a share for Accredited, the companies said in a statement. The offer for San Diego-based Accredited is 9.7 percent more than the stock's closing price last week. Lone Star, which oversees $13.3 billion, often targets distressed real estate and finance companies.
The stock tumbled as low as $3.77 in March as defaults on subprime mortgages, made to borrowers with poor payment histories, saddled Accredited with losses and led its bankers to curtail credit for new home loans. Private-equity firms and hedge funds are buying subprime lenders including ResMae Mortgage Corp. at beaten-down prices and plan to sell when the market recovers.
``Of all the subprime lenders that were growing pretty quickly over the last few years, Accredited probably had the best reputation,'' said Bose George, an analyst at KBW Inc. in New York. ``Given that this industry is going to continue in a much smaller form, these guys are probably a good management team to go with.''
The shares rose $1.54, or 11 percent, to $15.30 at 11:36 a.m. New York time in Nasdaq Stock Market trading on speculation a higher bid may emerge.
``This agreement is the best alternative available to protect shareholder value,'' Chief Executive James Konrath said in the statement. ``In Lone Star, we have found a partner who has a record of helping companies like ours successfully address financial and operational challenges.''
Riding the Cycle
Lone Star, founded in 1995 and run by John Grayken, has bought entire companies as well as non-performing loans and real estate, according to its Web site. The Dallas-based fund tries to take advantage of ``the tendency of the banking system to cyclically over-finance and then under-finance the property and other sectors.''
Lone Star has agreed to buy stakes in banks and lenders in South Korea, Japan and Germany, including a $429 million purchase of Japan's Korakuen Finance Co. announced in September. It also agreed last August to pay about $620 million for Lone Star Steakhouse & Saloon Inc., a 260-restaurant chain based in Wichita, Kansas, with no previous tie to the investment company.
Accredited operates nationwide and ranked 14th last year among U.S. subprime lenders with $15.8 billion in loans and a 2.6 percent market share, according to Inside Mortgage Finance, an industry publication.
Back From the Brink
The lender had a market value of more than $1 billion a year ago before the subprime mortgage industry began its swoon. The stock had lost half its value since the start of this year, and in March, the company said its auditing firm, Grant Thornton LLP, wasn't sure Accredited would survive.
The company still hasn't filed its annual report with regulators and last month announced that its first-quarter filing also will be delayed. Grant Thornton quit in April.
Accredited said May 11 it will report a ``significant loss'' in the first quarter because it issued about half as many mortgage loans compared with a year earlier. The company originated $1.9 billion in loans in the quarter, down 47 percent from the same period last year.
The workforce was cut 31 percent to 2,900 in a bid to reduce costs, the company said last month. Accredited employed 3,164 people as of September, according to data compiled by Bloomberg.
Bad Credit
Subprime loans are made to borrowers with the worst credit records and typically have the highest default rates.
The subprime mortgage industry faltered as late payments soared to record levels. Overdue residential mortgage loans reached 1.13 percent of the total during the first quarter, the highest level in the 17 years insured lenders have reported such data, said a May 31 report by the Federal Deposit Insurance Corp.
The sale to Lone Star means Accredited will avoid the fate of rivals such as New Century Financial Corp., the biggest independent U.S. subprime home lender last year, which went bankrupt in April and now is being liquidated. At least 50 mortgage companies have halted operations, gone bankrupt or sought buyers since the start of 2006.
Hedge funds have been among the buyers, with Citadel Investment Group planning to seek approval from a bankruptcy judge tomorrow for its $180 million acquisition of ResMae.
In March, trying to stave off a cash shortfall, Accredited took out a $200 million loan from the hedge fund Farallon Capital Management LLC. The loan was secured by Accredited's assets at 13 percent interest and guaranteed the hedge fund a 7 percent premium, or $14 million, if the loan was repaid within the first year.
Bear, Stearns & Co., Friedman, Billings, Ramsey Group Inc. and Houlihan Lokey Howard & Zukin advised Accredited, today's statement said. Piper Jaffray & Co. represented Lone Star.
Last Updated: June 4, 2007 11:53 EDT
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There is no good news for the housing market, or for those who finance it:
http://calculatedrisk.blogspot.com/
Last edited by host; 06-04-2007 at 10:06 AM..
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