October 21, 1997 3:40 PM
DOW JONES NEWS SERVICE
CITYSCAPE DN 35%;
CONV DEBT ISSUES
SAID TO PRESSURE
STK
UK Lending Chief Said To Have
Resigned
By Eric Weiner
NEW YORK (Dow Jones)--Shares of
CityScape Financial Corp. (CTYS)
plummeted to new lows Tuesday as
investors became increasingly
concerned about the company's recent
convertible debt deals, and word
surfaced that the firm's United Kingdom
lending director resigned.
CityScape's stock recently was down 2,
or 36.4%, to 3 1/2 on Nasdaq volume of
11.6 million, compared with average
daily volume of 596,500. Earlier, the
stock reached a 52-week low of 3 3/16,
passing the low of 5 7/16 set Monday.
Since the start of the month, when the
stock was trading at 10 1/8, the stock's
value has fallen roughly 63%.
The Elmsford, N.Y., subprime mortgage
lender is under pressure from possible
sanctions from a U.K. regulatory
investigation into its aggressive lending
practices there. Clearly, the news that
Martin Brand - the lending chief and a
director of the firm's U.K. unit - is no
longer with the firm isn't cheering
investors.
"If he really isn't with the company that
would be seen as pretty bad news," said
one Wall Street trader.
Although CityScape hasn't officially
announced the move, Brand supposedly
resigned two weeks ago, a short seller in
the company's stock said. CityScape
officials were not immediately available
for comment, but a woman identified as
the administrative assistant to the
president said Brand no longer works
for the firm.
According to the company's 1997 proxy
statement, Brand had been lending
director at CityScape's U.K. business
since its inception in May 1995. In 1996,
the 60-year-old Brand was paid
$944,397 in salary and bonus.
In addition, two offerings of CityScape
convertible preferred stock, issued in
$50 million tranches in April and
September to bolster its lagging capital
position, also may be pressuring the
shares, traders said.
The offerings give shareholders the right
to convert into CityScape common
stock at a 4% discount to the market
price. But, the lower the stock price
falls, the more dilution the convertibles
create. A story in Saturday's edition of
Barron's magazine spotlighted the
convertible stock offerings.
"Some decisions are being made here,"
a trader said. "People are either sitting
on the fence and waiting, or they're
dumping the stock. There aren't too
many buyers out there."
-Eric Weiner; (201) 938-5298 |
