The original Lone Star offer is for $15.10, but they are trying to get a bargain by offering only $8.50. Lone Star is trying to justify the 44% cut in offer price. LEND is suing Lone Star to try and get them to honor the original price, which is probably why the stock is more than the $8.50 offer, since folks are sspeculating on how LEND will respond. LEND says they are doing layoffs to cut back on operating expenses.
Details are in the Sept 1st headline:
A day after extending its offer for the fourth time, Lone Star Funds said it wants to proceed with a buyout of troubled mortgage lender Accredited Home Lenders Holding Co., but at a 44% discount to the original price.
The Dallas buyout shop wrote the Accredited Home board on Thursday, Aug. 30, to say it was prepared to amend its offer to $214 million, or about $8.50 per share. Lone Star had offered $400 million, or $15.10 per share on June 4.
Shares of San Diego-based Accredited Home have plunged recently on speculation the deal would fall apart. The letter from Lone Star vice president Marc L. Lipshy notes that the new offer price represents a 35% premium over the $6.31 closing price of the stock on Thursday.
"Under current conditions, the company may suffer further declines in value and have a difficult time surviving as a going concern," the letter said. "It is patently clear that swift action by the board of directors is needed to preserve the company's existing enterprise value." Accredited shares soared 37% Friday morning to $8.63, slightly over the new Lone Star offer.
In recent weeks, as the subprime mortgage turmoil deepened, Lone Star had been trying to back out of the deal, and on Wednesday it extended its offer until midnight on Sept. 12. It was the fourth time it had extended the offer.
Accredited has sued Lone Star in Delaware Court of Chancery in an attempt to get it to complete the sale.
In its letter to the target's board, Lone Star said if Accredited Home accepts the new price, then Lone Star would agree to more lenient closing conditions and the parties would end the litigation over the deal. The letter stressed that time is of the essence and the Accredited board would have to respond promptly.
As of early Friday morning, Accredited had made no response.
On Aug. 22, Accredited said that it would shut down most of its operations and slash its work force to 1,600 from 2,600 to help it weather the storm in the mortgage market. The company had earlier warned there was no guarantee it would survive and that bankruptcy was possible.
Several subprime mortgage lenders, who lend to people with poor credit histories, have had to sell out this year due to a liquidity drought in their industry. But several of these deals have fallen through as the crisis worsened.
Tax specialist H&R Block Inc. said Thursday that it has revised plans to sell its troubled Option One mortgage unit to Cerberus Capital Managemen