Fremont General Investor May Back Out


Fremont General, which quit subprime mortgage lending this year, said Wednesday a group that had agreed in May to invest $80 million for a minority stake in the company may back out.

The group, led by former thrift executive Gerald J. Ford, had agreed to buy preferred stock and warrants exchangeable into common stock, for an initial 16% stake.

Fremont , though, said that "in light of certain developments pertaining to the company" and its Fremont Investment & Loan unit, the Ford group was not prepared to complete the investment under the original terms.

The company said "it does not necessarily agree" with Ford's position, but is in talks concerning revised terms.

Santa Monica, California-based Fremont is the latest company hurt by the housing downturn to renegotiate with a suitor following the deterioration in market conditions.

Last week, San Diego subprime lender Accredited Home Lenders Holding , agreed to a lowered $296 million buyout by private equity firm Lone Star Funds.

Ford, a Dallas billionaire, could not immediately be reached. Fremont did not answer a call seeking further comment.

Subprime lenders make loans to people with weak credit.

Fremont is one of dozens of companies to quit mortgage lending this year after defaults rose, housing prices stalled, and investors stopped buying home loans they considered too risky.

Shares of Fremont closed Tuesday at $5.13.