AMRESCO, INC. Announces Restructuring
DALLAS, July 2 /PRNewswire/ -- AMRESCO, INC.: (Nasdaq: AMMB) announced today that it had filed a voluntary petition for reorganization relief pursuant to Chapter 11 of the United States Bankruptcy Code. In conjunction with the filing, the company has entered into an asset purchase agreement with NCS I LLC, a limited liability company, the members of which are Renewal Partners LLC, affiliates of Fortress Investment Fund LLC and Goldman Sachs Mortgage Company, an affiliate of Goldman Sachs Group Inc., whereby, subject to Bankruptcy Court approval and a mandatory auction process, the company will sell substantially all of its assets, exclusive of its cash and cash equivalents, for a purchase price of $309 million, subject to certain adjustments. The purchase price is comprised of $151 million of cash, subject to adjustment, a $25 million six-month note and the replacement of current warehouse indebtedness of $133 million. The Company's two operating subsidiaries, AMRESCO Commercial Finance, Inc. and AMRESCO Independence Funding, Inc. are not included in the bankruptcy filing. These subsidiaries have received commitment letters for up to $275 million of warehouse financing from NCS II LLC, an affiliate of NCS I LLC, to provide capital to refinance existing warehouse facilities and support the ongoing funding requirements of each entity. The replacement warehouse financing is subject to Bankruptcy Court approval as it will be guaranteed by AMRESCO and secured by its assets.
Randy Brown, AMRESCO's Chairman and CEO said: "During the recent proxy contest, the company's board of directors approved and the company entered into a letter of intent, subject to due diligence, for a loan from Renewal Partners and Fortress, two of the members of NCS I LLC, which if consummated would have provided funds for the company to grow its operations and continue repurchasing its senior subordinated notes. Shareholders would have retained a majority of the outstanding common stock of the company.
"Subsequently, the company's portfolio of business lending residuals experienced significantly reduced cash flows and deterioration in value due to continued increases in delinquencies and projected credit losses. After the 2001 meeting of stockholders, the company was informed that Renewal and Fortress would be unable to proceed with such transaction. Given the projected losses and anticipated default under the company's outstanding senior subordinated notes caused by the devaluation of the business lending residuals, the company believes a Chapter 11 filing, in conjunction with an auction process, will maximize the value to stockholders and provide a process for other potential buyers to bid for the company. Because the company has been unsuccessful to date in finding traditional warehouse financing to fund loan origination activities, this process will also allow AMRESCO to preserve the value of its loan origination franchise."
The ultimate approval and timing of the auction process is subject to Bankruptcy Court order. If such approval is granted, further details and information will be made available to prospective buyers through Greenhill & Co., Inc., the company's financial advisor. |
