H&R Block Option One Sale May Be Delayed Until December
H&R Block, scrambling to sell its money-losing Option One Mortgage unit to Cerberus Capital Management, Thursday said it might not complete the deal until the end of December.
The largest U.S. tax-return preparation company, whose shares fell more than 2 percent, earlier had said it expected the sale to close during its third quarter, which ends on Oct. 31. Block is still working on closing the deal by then, it said in a regulatory filing Thursday.
Company officials were not immediately available for further comment.
Block also said in the filing that its subprime mortgage unit now planned to cut more jobs this year than the 615 announced in May.
Option One is cutting costs to deal with reduced loan origination volumes and lower loan prices in the secondary market.
Kansas City-based Block in the filing said Option One had announced the expanded expanded restructuring plan Monday.
Block did not estimate the cost of the additional restructuring moves.
The company, which bought Irvine, California-based Option One in 1997 for $190 million, says the unit generated more than $2 billion in revenue over the years from making loans to home buyers with weaker credit.
But the lender began bleeding money in the past year as U.S. subprime mortgage markets imploded.
Under pressure from shareholders, Block in April announced an agreement to sell Option One to Cerberus, a buyout fund that has snapped up other lenders, for a price that will change with the underlying value of its assets.
That value fell to $1.1 billion as of April 30, compared with Block's earlier expectations of more than $1.3 billion. In June, Block Chief Executive Mark Ernst told analysts the deal was on track for completion by Oct. 31.
Shares of Block were down 50 cents, or 2.4 percent, at $20.02 in morning New York Stock Exchange trade.