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Texas S&L Gets Federal Approval to Sell J.M. Peters : Divestiture: San Jacinto Savings, being run by Resolution Trust, is expected to close deal by year's end.


NEWPORT BEACH — The Texas savings and loan that owns J.M. Peters Co. said Wednesday that it has received permission from the federal government to sell its majority stake in the Newport Beach home builder.

San Jacinto Savings Assn. in Houston said it has hired investment banker McFarland Dewey & Co. to help solicit bids for J.M. Peters before Sept. 30. A sale is expected before year's end.

San Jacinto was taken over last year by the federal Resolution Trust Corp. The thrift bought 85% of the stock in Peters six years ago.

The rest of the stock is publicly traded and closed Wednesday on the American Stock Exchange at $2.125 a share, down 12.5 cents.

If San Jacinto can get that price for the 12 million shares it holds, the buyer would be acquiring most of the company for about $25 million.

That's a far cry from three years ago, when Peters was flying high and stock analysts said its shares were undervalued at more than $9 a share.

The company's earnings were around $2 a share then, about what the stock is trading at now.

Since then, however, home buyers have been pushed out of the market by the recession and high home prices. What's more, San Jacinto was Peters' main lender, and since the thrift was seized, Peters has been unable to borrow the money it needs to build more homes.

The company lost $108 million last year on revenue of $215.5 million, compared to a profit of $25 million on revenue of $315.7 million a year earlier.

Likely buyers, one stock analyst said, could be Japanese companies looking to enter the Southern California home-building market. (Japanese investors have increasingly turned from buying commercial buildings like offices, a market that is now moribund, to faster and more profitable returns from building housing, say real estate experts.)

At a likely price of around $25 million, Peters could turn out to be a good buy if the housing market rebounds and it can find a lender, said R. Mark Matheson, an analyst at Newport Beach investment banker Cruttenden & Co.

The company's chairman, James M. Peters, wouldn't comment Wednesday on the pending sale.

San Jacinto, a subsidiary of bankrupt Dallas real estate investor Southmark Corp., said it would circulate confidential financial information on the company to bidders after Sept 1. The RTC, the federal agency that manages the sale of seized thrifts' assets, must approve the sale.

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