Subprime lender Accredited Home Lenders Holding , trying to avoid a cash crunch, said on Tuesday it had received a five-year, $200 million loan with an annual interest rate of 13%.
News of the distressed financing deal lifted Accredited shares 23% before regular trading began.
Shares of U.S. subprime lenders, which make mortgages for borrowers with poor credit histories, have been hammered in recent weeks amid a rising wave of delinquencies and pulled funding by Wall Street investment banks.
Accredited said it received the $200 million commitment from Farallon Capital Management, a San Francisco manager of equity for institutions and wealthy people. Farallon will receive 3.3 million warrants from Accredited, with an exercise price equal to $10 a share. That means Farallon could cash in those warrants and own about 14% of Accredited.
Accredited said the loan, secured by the company and its subsidiaries, and the sale of $2.7 billion in mortgage loans are part of its goal to boost liquidity.
The company, however, said it will continue to consider other strategic options. Accredited shares rose $2.08 to $11.03 in early electronic trading.