Fremont General Corp. took a big hit today after the investor group which had agreed to acquire the ailing California-based savings and loan said it didn’t want to proceed with the proposed rescue plan.
Fremont said that “in light of certain developments pertaining to the company”, and more specifically the Fremont Investment & Loan unit, the Ford investment group was not ready to invest.
The Ford Group originally agreed to buy preferred stock and warrants in Fremont for an initial 16 percent stake, injecting $80 million into the beleaguered mortgage lender to ensure its ultimate survival.
“His decision to back out suggests either that this is a negotiating ploy to get a lower price or he’s looked at everything and sees such a mess that he cannot deal with it,” said Kovaleff, the single Wall Street analyst who still publicly follows the stock.
Fremont said it did “not necessarily agree with the factual positions” and was in talks to renegotiate the deal.
Recently, other high profile mortgage-related acquisitions showed signs of stress, including Lone Star’s buyout of Accredited home, and GE’s takeover of PHH Corp.
In May, Fremont disclosed a letter of intent to sell its home-lending and mortgage-servicing portfolio to the hedge fund Ellington Capital Management.
Fremont hasn’t filed an annual report for 2006 or any reports for subsequent quarters.
Shares of Fremont General were trading down roughly 20%, dropping to $4.13 in late trading, well below their 52-week high of $17.30.