Accredited Home Lenders Holding Co., a San Diego based subprime mortgage lender who agreed to be acquired on June 4th by private equity firm Lone Star may now be facing bankruptcy instead.
The original price of the merger was set at $15.10 for each Accredited Home Lenders share, at a total valuation of $400 million, but that price is surely going to come down if any deal is ever announced.
Many analysts believe the deal will still close, just at a price closer to the current market price which is now hovering around $5.24 a share.
If an agreement isn’t reached, there is a good chance that bankruptcy will be the only option for the ailing mortgage lender.
And if the merger does fall out, Accredited Home must pay a $12 million fee to Lone Star.
Accredited Home Lenders blames much of their current status on the October acquisition of Aames Investment Corp., a Los Angeles subprime lender that was flying high during the subprime boom.
Shares of Accredited Home dropped roughly 35% or $2.90 a share on the bankruptcy news, to a price of $5.31 a share, which is slightly above their 52-week low of $3.77 a share.