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A Timely $41 Million Lets UnionFed Avert Takeover : Thrifts: After years of losses, commitments from investors put company just over what regulators had required by next week.

September 17, 1993|JAMES S. GRANELLI | TIMES STAFF WRITER

BREA — UnionFed Financial Corp., threatened with a government takeover after four years of losses, said late Thursday that it has won commitments of more than $41 million from new and current investors.

The investor support means that the company will receive net proceeds of about $39 million for its beleaguered Union Federal Savings Bank in Los Angeles. That figure is $1.5 million more than what federal regulators has required the thrift to obtain by next Thursday.

The company also extended until Wednesday the deadline for current shareholders to buy additional stock in a special offering to them, one of two offerings the company made to get the money it needed.

UnionFed said it obtained written commitments from institutional and individual investors, as well as from directors, officers and employees of the company.

The new funding will allow top managers to turn their energies more toward the thrift business at its 14 branches in Los Angeles and Orange counties, said David S. Engelman, UnionFed's chairman, in a prepared statement.

The company also can concentrate on reducing its bad loans and devalued real estate holdings, he said in the statement.

UnionFed got into trouble with bad commercial real estate loans it had made in New England, Florida and, more recently, commercial and residential loans in California.

It was also hurt by poor real estate ventures and a forced sale of properties in a real estate development subsidiary. The 1989 federal law that restructured the thrift industry requires thrifts to reduce direct real estate holdings to nearly nothing by next year.

The company had to restate its 1990 earnings after an audit to show a loss, and it has yet to recover. It posted a $32.2-million loss for its fiscal year ended June 30, bringing its four-year total of red ink to $137.1 million and wiping out much of its capital--its final cushion against losses.

The U.S. Office of Thrift Supervision, under new laws that require prompt action when banks or thrifts are low on capital, required the company to obtain the new funding by next week or face a federal takeover of its thrift. Union Federal has $1.2 billion in assets.

UnionFed executives were not available to elaborate on Thursday's press release.

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