Accredited Home Lenders said late Tuesday that it had agreed to a new, lower price offered by Lone Star Funds, and that it would also drop the associated lawsuit.
The new buyout price of $11.75, or $295 million is well below the originally agreed upon $15.10 per share, but a premium to the offer price of $8.50 per share made on August 31.
The offer is a 20 percent premium to the San Diego based subprime lender’s closing share price on Tuesday.
The news (hopefully) ends the saga between the two companies, which has been going on for months since Accredited Home supposedly failed to meet commitments tied to the original agreement.
Lone Star Funds then attempted to back out of the buyout, at which point Accredited sued the private equity firm to make good on the deal.
The deal is a big positive for Accredited, who just yesterday announced that it could face bankruptcy if the deal had in fact fallen through.
“This new agreement fairly settles our dispute and will expedite the completion of the merger with Lone Star,” said Accredited chief James Konrath in a release. “We will now turn to the business of rebuilding Accredited for a brighter future with Lone Star.”
Lone Star will also inject $49 million into the mortgage lender, with $34 going towards outstanding debt from creditors, and $15 million to boost liquidity.
Late last month, Accredited announced it would be shutting down its retail lending division and suspending loan origination through its wholesale channel, while closing 65 branches and cutting the workforce from 2,600 to 1,000.
Shares of Accredited jumped on the news, up $1.76, or 18.00% to $11.54 in midday trading on Wall St.