DALLAS (AP) - Accredited Home Lenders Holding Co. rejected a private equity
firm's attempt to lower its price to buy the subprime mortgage lender, saying
Friday that it would continue a lawsuit aimed at closing the deal.
Lone Star agreed in June to pay $15.10 per share, or $400 million, for
Accredited. But late Thursday, Lone Star told the mortgage lender that it wanted
to pay $8.50 per share.
In exchange for the reduced price, Lone Star offered to let Accredited seek
other buyers.
But Friday afternoon, Accredited said it had a deal two weeks ago when 97
percent of the company's shares were tendered at $15.10 apiece. Accredited said
it would continue pursuing a lawsuit it filed this month in a Delaware court to
try to force the equity firm to complete the deal.
Accredited shares rallied Friday, rising $2.71, or 43 percent, to $9.01 in
afternoon trading. The shares had traded above $30 late last year but tumbled in
March and remained depressed.
The Lone Star-Accredited deal is the latest in a string of buyouts that are
in trouble or being renegotiated.
Dallas-based Lone Star has been trying to back out of the transaction,
arguing that there had been "drastic deterioration" in Accredited's financial
and operating health. Accredited was active in the subprime mortgage lending
business and has run into financial trouble.
Some analysts say San Diego-based Accredited faces bankruptcy if the deal
falls through. Lone Star played on that fear in a letter Thursday to
Accredited's board.
"We believe, and apparently (Accredited) also believes based on its previous
public statements, that under current conditions, the company may suffer further
declines in value and have a difficult time surviving as a going concern," Lone
Star Vice President Marc L. Lipshy said in the letter.
Lone Star proposed to drop some conditions of the earlier sale agreement,
dismiss the lawsuits, and let Accredited seek a better offer from other buyers
-- but Lone Star would have the right to match other offers.
Lone Star said its reduced offer was still a 35 percent premium to
Accredited's closing stock price of $6.31 per share on Thursday.
Lone Star extended its latest offer until Sept. 12, its fourth extension.
Accredited did not immediately return a call for comment on Friday.
Problems in the credit markets have led to price reductions in other recent
acquisitions.
On Thursday, Home Depot Inc. closed the sale of its wholesale distribution
business to a group of private equity firms for $8.5 billion, down from the
original price of $10.3 billion in June. H&R Block Inc. agreed to sell its
money-losing subprime mortgage division to Cerberus Capital Management for $300
million less than the value of the unit's assets -- a figure yet to be
determined because of continuing uncertainty in the mortgage market.
Accredited, which makes home loans in the United States and Canada, has
struggled with rising delinquencies among high-risk borrowers.
Last week, the company stopped taking new U.S. loan applications and said it
would lay off more than 60 percent of its workers and close its retail lending
business and half its wholesale division.
Lone Star raises investment money from pension funds, universities and other
large investors. It has more than $13.3 billion under management.
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