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Accredited, Lone Star Amend Merger Deal, Cut Price

Subprime mortgage lender Accredited Home Lenders agreed on Tuesday to be bought at a lower price by Lone Star and to drop a lawsuit against the private equity firm.

Lone Star, which on June 4 had agreed to pay $15.10 per share for Accredited common shares, agreed to acquire the mortgage lender for $11.75 per share under an amended merger agreement.

The acquisition remains structured as an all-cash tender offer.

Lone Star had tried to back out of the merger agreement after market conditions for mortgage lenders deteriorated.

In late August, it submitted a revised $8.50-per-share takeover bid, but Accredited rejected the lowered offer.

The two companies agreed to an immediate stay of a lawsuit filed by Accredited regarding the merger, according to a statement.

Lone Star also agreed to provide financing of $49 million to Accredited, of which about $34 million will be used to pay down outstanding debt against one of the mortgage lender's creditors.