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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: ChanceIs who wrote (84793)	8/12/2007 9:39:24 AM
From: ChanceIs	Read Replies (1) \| Respond to of 306849

Lone Star May Not Close Purchase Of Accredited Home Lenders 3:18 AM EDT August 11, 2007 By Lingling Wei Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- Private-equity giant Lone Star Funds said it may not close the $400 million acquisition of Accredited Home Lenders Holding Co. (LEND), blaming "the drastic deterioration in the financial and operational condition" of the subprime-mortgage lender. In a regulatory filing, Lone Star said as of Friday, Accredited "would fail to satisfy the conditions to the closing of the tender offer" and it "does not expect to be accepting shares tendered as of the end of the current offer period" ending Aug. 14. Accredited disputed the assertion and said it will "hold Lone Star to its obligations." The flare-up comes as the continuing mortgage-market meltdown is forcing a growing number of potential buyers to reassess the businesses they are taking on. As recently as Tuesday, mortgage-insurance giant MGIC Investment Corp. (MTG) said it doesn't have to complete the acquisition of smaller rival Radian Group Inc. (RDN) in light of the losses in a jointly owned subprime-mortgage venture. Lone Star, in Dallas, agreed in June to buy San Diego-based Accredited for $400 million in cash, or $15.10 a share, in another deal involving nonbanks such as private-equity firms and hedge funds becoming the buyers of last resort for risky but still-viable home lenders. Lone Star, which counts as clients corporate and public pension funds, university endowments and family trusts, has more than $13.3 billion under management. Accredited - long viewed as one of the stronger independent lenders because of its relatively prudent underwriting policies - saw its shares plummet to a 52-week low of $3.77 in March, after disclosing its funding challenges amid the broader struggles of an industry plagued by rising delinquencies on loans made to high-risk borrowers. It was among the top 20 subprime lenders last year. In a statement late Friday, Accredited said its agreement with Lone Star "expressly provides that changes" in the subprime industry that "have not disproportionately affected the company" don't serve as a basis for the firm to walk away from the deal. The lender said it intends to hold Lone Star "fully responsible for any damages caused by its failure to satisfy those obligations." In a separate regulatory filing, Accredited said it expects to report a second-quarter loss of $40 million to $60 million, compared with net income of $41 million a year earlier. Reflecting investors' aversion to owning risky assets, the lender sold fewer loans for less money in the quarter. And it originated $1.7 billion of mortgages, down 59% from the year-earlier period. Shares of Accredited closed Friday up $2.78, at $8.90, but plunged in after-hours trading to $4.99.