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Accredited rejects lower sale price

September 01, 2007|From the Associated Press

DALLAS — Accredited Home Lenders Holding Co. rejected a private equity firm's attempt to lower its price to buy the sub-prime mortgage lender, saying Friday that it would continue a lawsuit aimed at closing the deal.

Lone Star Funds had agreed in June to pay $15.10 a share, or $400 million, for Accredited. Late Thursday, Lone Star said it wanted to pay $8.50 a share. In exchange, Lone Star offered to let Accredited seek other buyers.

San Diego-based Accredited said Friday that it had a deal two weeks ago when 97% of the company's shares were tendered at $15.10 apiece. Accredited said it would continue pursuing a lawsuit it filed last month in a Delaware court to try to force the equity firm to complete the deal.

Accredited shares rallied Friday, rising $2.74, or 43%, to $9.05.

Dallas-based Lone Star has been trying to back out of the transaction, arguing that there has been "drastic deterioration" in Accredited's financial and operating health. Accredited was active in the sub-prime mortgage-lending business and had run into financial trouble.

Lone Star proposed to drop some conditions of the earlier sale agreement, dismiss the lawsuits and let Accredited seek a better offer from other buyers -- but Lone Star would have the right to match other offers.

Lone Star said its reduced offer was still a 35% premium over Accredited's closing price of $6.31 a share Thursday.

Lone Star extended its latest offer until Sept. 12.

Accredited did not immediately return a call for comment on Friday.

Accredited, which makes home loans in the United States and Canada, has struggled with rising delinquencies among high-risk borrowers.

Last week, the company stopped taking new U.S. loan applications and said it would lay off more than 60% of its workers and close its retail lending business and half its wholesale division.

Lone Star has more than $13.3 billion under management.

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