Shares of Irvine, CA based subprime lender New Century Financial Corp. plummeted on news that all of their secondary creditors had either cut financing or announced their intention to halt financing.
New Century Financial Corp. had been late in making payments to such banking giants as Bank of America, Morgan Stanley, and Citigroup, the companies who provided the financing for their loan originating unit.
But buybacks and defaults have driven New Century deeper and deeper into debt as investors rejected problematic loans, halting production and hammering income.
Today’s news, though largely expected, adds to the bankruptcy worries many investors feared after previous, similar news releases from New Century last week and earlier this year.
The only hope for New Century now is for new investors to come in and save the battered company from a complete meltdown.
Shares of New Century fell $1.55, or 48.29% to end the day at $1.66, far off their 52-week high of $51.97.