NEW YORK – Accredited Home Lenders Holding (LEND) Co. said Monday it had sued private equity firm Lone Star Funds, seeking to force it to complete the $400 million takeover of the money-losing subprime mortgage lender.
Lone Star had agreed in June to pay $15.10 per share for San Diego-based Accredited. On Friday, however, Lone Star said it would not go through with the buyout, citing a "drastic deterioration in the financial and operational condition of the company."
Accredited said on Monday that the merger agreement "expressly provides that Lone Star may not refuse to honor its obligations based on any deterioration in the business." If shareholders tender more than half of Accredited shares by Tuesday, all conditions of the merger will be met, Accredited said.
Last week, Accredited projected a second-quarter net loss of $40 million to $60 million. It said it had made 59 percent fewer loans than a year earlier and that the delinquency rate among loans it serviced had tripled.
The company also said it had ended July with $175 million of liquidity, down from $240 million at the end of June.
Earlier in August, Accredited said its survival was in doubt and that a bankruptcy filing was a possibility.