Accredited Home Lenders Holding Co. (LEND) Stock Up on Sale
Accredited Home Lenders (LEND, 9.43) said Friday it reached an agreement to sell $2.7 billion of loans to help ease recent pressures from margin calls. The subprime mortgage lender also said it will not file its annual report by Friday as previously announced. Its shares traded higher on the news, gaining more than 30% in pre-market activity.
The stock hit a low on Tuesday, amid growing concerns that the problems facing the subprime mortgage market will spread to the prime mortgage market, but rose sharply in the following two days on speculation that the company would receive additional funding.
While we remain more optimistic and are not jumping on the subprime bandwagon, we would remain on the sidelines with Accredited given its substantial exposure to the lower-quality loans and increased headline risk.
Terms of the sale include a holdback reserve of approximately $40 million to satisfy all future claims against the loans, including early payment defaults. Claims in excess of the holdback reserve will have to recourse against the company. The sale is expected to be completed over the next couple of days.
Accredited said the transaction included substantially all of its loans held for sale that are currently funded out of its warehouse and repurchase credit facilities, asset-backed commercial paper facility, and its equity. The sale of its loans will provide additional liquidity and facilitate the company's efforts to continue its previously announced intention to explore strategic options, including potentially raising additional capital.
--Richard Jahnke, Briefing.com
The stock hit a low on Tuesday, amid growing concerns that the problems facing the subprime mortgage market will spread to the prime mortgage market, but rose sharply in the following two days on speculation that the company would receive additional funding.
While we remain more optimistic and are not jumping on the subprime bandwagon, we would remain on the sidelines with Accredited given its substantial exposure to the lower-quality loans and increased headline risk.
Terms of the sale include a holdback reserve of approximately $40 million to satisfy all future claims against the loans, including early payment defaults. Claims in excess of the holdback reserve will have to recourse against the company. The sale is expected to be completed over the next couple of days.
Accredited said the transaction included substantially all of its loans held for sale that are currently funded out of its warehouse and repurchase credit facilities, asset-backed commercial paper facility, and its equity. The sale of its loans will provide additional liquidity and facilitate the company's efforts to continue its previously announced intention to explore strategic options, including potentially raising additional capital.
--Richard Jahnke, Briefing.com
Labels: Accredited Home Lenders Holding Co., LEND
posted by Stock Administrator @ 8:04 PM
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