Magazine article American Banker

Fremont: Investor Trying to Change Terms for a Stake

Magazine article American Banker

Fremont: Investor Trying to Change Terms for a Stake

Article excerpt

Gerald J. Ford, the billionaire Texas investor who agreed four months ago to buy a minority stake in Fremont General Corp. for $80 million, is attempting to revise or walk away from the deal, the California banking company said Wednesday.

Mr. Ford, the former chief executive officer of Golden State Bancorp, has told Fremont that he "is not prepared to consummate" the deal "in light of certain developments pertaining to the company," Fremont said. The Santa Monica company did not say which developments were at issue.

Fremont said it "does not necessarily agree with the factual positions taken by Mr. Ford" but nevertheless is in talks to revise the agreement's terms.

There are "no assurances" that the two parties will agree on "revised transaction terms," Fremont warned.

Mr. Ford did not return calls seeking comment. Fremont declined to comment through a spokesman.

Fremont General sold its commercial lending unit in July to iStar Financial Inc. of New York for $1.9 billion and divested its ailing subprime home lending business to the hedge fund Ellington Capital Management LLC in April.

Several deals to buy mortgage companies have been canceled or renegotiated this year. But Theodore P. Kovaleff, an analyst at Sky Capital LLC, said he was at a loss to explain why a deal involving what is left of Fremont - its industrial bank - would fall through.

"We don't know how much of this is simply an attempt to get a better price," Mr. Kovaleff said, citing the compromise that Accredited Home Lenders Holding Co. of San Diego reached last week with the Dallas buyout firm Lone Star Funds to sell itself for 28.5% less than the originally negotiated price.

The industrial bank, Fremont Investment and Loan, has roughly $10.7 billion in deposits, 73,000 banking customers, and 22 branches in central and southern California. …

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