AMRESCO Comments on Moody's Downgrade Action
October 23, 1998 07:20 PM
DALLAS, Oct. 23 /PRNewswire/ -- Today, AMRESCO AMMB received notification of a downgrade on its public debt by Moody's Investors Service. The ratings action resulted in moving the senior debt rating from B3 to Caa3 and the senior subordinated debt rating from Caa1 to Caa3.
"We strongly believe that the company's financial condition does not warrant this negative ratings action," said Robert H. Lutz, Jr., chairman and CEO of AMRESCO. "Over the past several weeks, the company has taken a number of significant steps to improve liquidity and reduce the risk inherent in the company's balance sheet. Although some of the actions have resulted in the recognition of losses, we believe these decisions have been appropriate in light of the current disruption in the capital markets in which the company operates."
The recently announced sales of AMRESCO's commercial mortgage and home equity lending portfolios has reduced the company's balance sheet from $4.8 billion at September 30, 1998 to a current level of approximately $2.5 billion. These transactions have also reduced outstanding debt from $4.0 billion to approximately $1.7 billion. At September 30, 1998, the company's total debt to equity ratio stood at 5.9:1. On a pro-forma basis after the two loan sale transactions, the company's debt to equity ratio was 2.7:1. Additionally, the company has suspended its commercial mortgage conduit activities and has ceased its bulk loan acquisition activities in its home equity lending unit.
Currently, AMRESCO's liquidity is sufficient to meet its needs and liquidity is expected to continually increase over the foreseeable future. The company has committed credit facilities in place to fund its current lending activities. The company is in compliance with the terms of all of its debt agreements.
AMRESCO, INC. is a diversified financial services company specializing in commercial and residential real estate and home equity lending; asset management workout services; and commercial finance. The company is headquartered in Dallas and has offices nationwide as well as internationally in Canada, the United Kingdom and Mexico. For more information about AMRESCO, visit the web site at www.amresco.com.
Note: Certain statements contained in this press release are not based on historical facts. These statements are forward-looking statements that are based on current expectations that involve a number of risks and uncertainties. Consequently, actual results achieved may differ materially from what is presented. For a discussion of such risks and uncertainties, see "Risk Factors" in the reports that the company files with the Securities and Exchange Commission, including the company's registration statement.
SOURCE AMRESCO, Inc.
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