NovaStar Receives Extension from Wachovia

December 6, 2007 No Comments »

Embattled mortgage lender NovaStar Financial revealed in an SEC filing that it has received a one-week extension from Wachovia to waive certain net worth requirements until Friday December 7.

The original waiver, which ended November 30, could have forced NovaStar to make good on $83.9 million in debt and $11.8 million in fees if it hadn’t been extended.

A month ago the Kansas City-based company estimated that it had just $51.5 million in cash and would likely have to file for bankruptcy if forced to repay Wachovia.

The speculation as to whether the waiver was extended sent shares of NovaStar on a rollercoaster ride, rising roughly 50 percent Friday, gaining nearly 70 percent Monday, losing 38 percent Tuesday, then climbing 19 percent Wednesday before NovaStar announced the waiver.

NovaStar is also awaiting word from the NYSE regarding a possible delisting, who had requested a public statement from the struggling mortgage lender after the recent stock price volatility.

Regardless of the waiver extension, things look pretty grim at NovaStar, whose operations now consist of managing a mortgage securities portfolio and running a retail brokerage.

NovaStar was formerly one of the top 20 subprime mortgage lenders, originating more than $10 billion in home loans in 2006, according to Inside Mortgage Finance.

Shares of NovaStar were up 48 cents, or 19.35%, to $2.96 in afternoon trading on Wall Street.

Leave A Response