Accredited Home Lenders Holding, Lone Star Fund amend merger deal

09/19/07 - newratings.com

NEW YORK, September 19 (newratings.com) - Subprime mortgage lender Accredited Home Lenders Holding Co (LEND) Tuesday announced that it had agreed to be acquired by Lone Star Fund at a lower price than was initially agreed upon.

Under the amended terms, Lone Star Fund will pay shareholders $11.75 cash per Accredited Home Lenders Holding common share, or a total consideration of about $296 million. The revised offer is lower than the initial price of $15.10 per share, or $400 million, offered by Lone Star Fund on June 4 and higher than the $8.50 per share revised offer made in August when Accredited Home Lenders Holding sued the former company for trying to withdraw from the deal after market conditions for mortgage lenders deteriorated. Dallas-based Lone Star Fund has also agreed to provide financing of $49 million to Accredited Home Lenders Holding, out of which $34 million would be used for extinguishing outstanding debt from one of its creditors. The San Diego, California-based company has agreed to immediately stay its lawsuit against Lone Star Fund.

Lone Star Fund had earlier tried to back out of the merger, arguing that Accredited Home Lenders Holding’s financial and operating health was deteriorating rapidly due to problems in the subprime mortgage lending business. Meanwhile, Accredited Home Lenders Holding had stated on August 22 that it would close more than half its operations and cut its headcount by 1,600 in a bid to outlast the crisis.