Accredited Home Posts Big Loss; Survival at Risk
Accredited Home Lenders, a struggling subprime mortgage lender, on Tuesday posted a $260.2 million quarterly loss and said it remained unsure it would survive the fallout from a slumping U.S. housing market.
The loss was $10.29 per share for the quarter that ended March 31, according to a delayed first-quarter report filed with the U.S. Securities and Exchange Commission. That compared with a profit of $35.8 million, or $1.61 per share, a year earlier.
Accredited said quarterly net revenue totaled negative $134.6 million, including a $178.9 million loss from the sale of mortgage loans.
Earlier this month, San Diego-based Accredited closed much of its lending operations, eliminating 1,600 of 2,600 jobs. Subprime lenders make home loans to people with poor credit.
Dozens have curtailed lending or quit the industry this year as defaults rose and investors stopped buying subprime loans.
Accredited said it expects to need further amendments to or waivers of covenants in its credit facilities in 2007.
"We face significant challenges due to adverse conditions in the non-prime mortgage industry, and we cannot assure you that we will continue to operate as a going concern," it said.
The company made $15.8 billion of home loans last year. Accredited has been trying to force Dallas-based private equity firm Lone Star Funds to complete a $400 million takeover, valuing Accredited at $15.10 per share.
Lone Star tried to back out of the June 4 agreement after market conditions deteriorated. In late August, it submitted a revised $8.50 per share bid, valuing Accredited at $214 million, but Accredited rejected the lowered offer.
Accredited said a trial on the matter is scheduled to begin on Sept. 26 in Delaware Chancery Court.
Shares of Accredited closed Monday at $10.28 on the Nasdaq. They began the year at $27.35.