Accredited Home Lenders
(NDAQ:LEND) shares rose $1.78, or 18.2%, to $11.56 today after it
finally reached an agreement to sell out to Loan Star at $11.75 per
share, according to a statement released by both companies.
"This
new agreement fairly settles our dispute and will expedite the
completion of the merger with Lone Star," said Accredited chairman
and CEO James A. Konrath in the statement. "We will now turn to the
business of rebuilding Accredited for a brighter future with Lone Star."
The
revised bid comes substantially lower than the previous offer, but just
hours after the company released its 10-Q saying it lost $260 million
in the first quarter and may not survive. The price jump also implies
that the bid caught shareholders off-guard and came in higher than
expected.
The agreement stipulates that Loan Star lend
Accredited $49 million so it can pay down outstanding debt to one
creditor and leave the company with $15 million in liquidity.
Meanwhile, Loan Star would also deposit $295 million into an escrow
that would be paid out to Accredited shareholders once the deal closes.
In
the end, this is good news for Accredited shareholders who have been
bracing for the worst case scenario. Clearly, the company was on the
brink of bankruptcy before it was saved by Lone Star and at a price
that isn't so bad. Combined, these factors make LEND a stock
worth watching!
Related CompaniesFannie Mae (FNM)
Freddie Mac (FRE)
Doral Financial (DRL)