What's an Amalgamated Gadget LP?!? It (this thingy) appears to have interest in Fremont General's assets.
Fremont General faces angry investor
Wed Oct 17, 2007 11:00am EDT
By Jonathan Stempel
NEW YORK (Reuters) - A disgruntled shareholder in Fremont General Corp (FMT.N: Quote, Profile, Research) has called on the troubled California savings and loan to end "unproductive" takeover talks with an investor group led by Texas billionaire Gerald J. Ford, and put itself on the auction block.
Fremont, which regulators ordered in March to stop offering subprime mortgages, separately disclosed that it lost $1.06 billion in the 18 months ended June 30 and expects further losses through year-end.
Fremont shares fell 23 cents to $3.76 in morning trading on the New York Stock Exchange. They began the year at $16.21.
Amalgamated Gadget LP, which said it owns 8.3 percent of Fremont's shares and is controlled by investor Geoffrey Raynor, said it was prepared to make an offer "at least as attractive" as Ford's original offer to inject $80 million in Fremont.
In a U.S. Securities and Exchange Commission filing, Fort Worth, Texas-based Amalgamated demanded that Fremont conduct a "fair and open auction process" and threatened a lawsuit to block any "secretly negotiated deal" with Ford or anyone else.
It also pledged to work with regulators to find a new Fremont chief executive to replace Louis Rampino.
The Ford group investment, announced May 22, was intended to help insure Fremont's survival. But Fremont said on September 26 that the group might back out, citing unspecified "developments pertaining to the company." Its shares fell 19.3 percent that day.
In its own SEC filing, Santa Monica-based Fremont said it remains in talks with Ford and plans to explore strategic alternatives if the negotiations break down.
It said a breakdown would keep it out of compliance with a March order from the Federal Deposit Insurance Corp that set capital requirements and restricted its lending practices.
Ford, based in Dallas, is a former thrift executive who used to run Golden State Bancorp Inc in California.
Amalgamated, Ford and Fremont did not immediately return requests for comment.
Fremont has also attracted interest from the hedge fund activist Harbinger Capital Partners, which last week disclosed a 9 percent stake in the company.
LOSSES TO CONTINUE MOUNTING
In delayed financial reports filed with the SEC, Fremont posted net losses of $265.2 million, or $3.45 per share, for the 2007 second quarter, and $590.6 million, or $7.74 per share, for the 2007 first quarter.
It also reported a loss of $202.3 million, or $2.72 per share, for 2006. It previously posted a 2005 profit of $327.9 million, or $4.37 per share.
Fremont hired a new auditor in April after Grant Thornton LLP quit, saying the company had failed to provide needed data.
Fremont said it expects a net loss from continuing operations for at least the rest of 2007. It plans to rely on interest income, which totaled $332 million from January to June, as its main source of revenue.
Shareholder equity per share fell to $3.52 on June 30 from $14.09 at the end of 2006, Fremont said.
On October 12, Moody's Investors Service downgraded Fremont senior debt to "Caa3," a low junk grade, saying the company had "no sustainable franchise" without a new investor.
Fremont had been one of the 10 largest U.S. providers of subprime home loans, which go to people with poor credit. Dozens of mortgage lenders have contracted, quit the industry or gone bankrupt this year.
(Additional reporting by John Tilak in Bangalore)
© Reuters 2006.
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