Neither does Lone Star. Lone Star had agreed to purchase Accredited Home Lenders for $400 million but in a recent SEC filing says in intends to back out of the agreement. From Housing Wire:
Lone Star slated to purchase Accredited for $400 million filed a statement with the SEC late Friday disclosing that it no longer intends to complete a purchase of the troubled subprime lender. Lone Stars filing with regulators said that Accredited would fail to satisfy agreed-upon conditions of closing the deal.
I’d say SMART MOVE! Way to get the hell out of there. Why would you spend $400 million on a lender that is essentially tied to the whims of other banks who extend credit? You’re basically buying a middle-man with little to ZERO control over the types of loans it can and can’t make - who has little to no money of its own to lend (no small detail).
Of course, Accredited is kicking and screaming “breach of contract” as this sale may be its last good chance of getting out of this mess alive. (Remember they threw in those two little words “going concern” in to their most recent quarterly filing.)
Not surprisingly, Accredited is fighting back as if the companys life depended upon it. From a press release issued tonight:
Accredited noted that the Agreement and Plan of Merger with Lone Star expressly provides that changes generally affecting the non-prime industry in which the Company operates which have not disproportionately affected the Company do not provide a basis for Lone Star to not honor its obligations. Accredited said that it intends to hold Lone Star to its obligations, and to hold it fully responsible for any damages caused by its failure to satisfy those obligations.
This should get interesting. I wonder how many more of these deals will fall apart over the coming months as nervous buyers wake up and run for the exits?
UPDATE: Accredited has filed suit against Lone Star for failure to perform on the purchase. From Yahoo! Finance:
Accredited Home Lenders Holding Co. (NASDAQ:LEND - News; “Accredited” or “Company”) announced today that it has filed a lawsuit against Lone Star Fund V (U.S.), L.P. and two of its affiliates (”Lone Star”) seeking specific performance of Lone Star’s obligations to close Lone Star’s tender offer for the outstanding common stock of Accredited and to complete the merger with Accredited.
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[Source: Blown Mortgage]
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