Magazine article American Banker

Chase Gives Up Equibank Option in Deal Providing Fresh Capital

Magazine article American Banker

Chase Gives Up Equibank Option in Deal Providing Fresh Capital

Article excerpt

PITTSBURGH -- The Chase Manhattan Corp., the Equimark Corp., and an investor group led by Equimark chairman James D. Lowry have signed an agreement that ends Chase's option to buy Equimark's main subsidiary, Equibank.

The agreement also marks a major step in Mr. Lowry's efforts to meet the mandate of federal and state regulators to add $100 million in fresh capital to his corporation by this summer.

Along with announcing the agreement with Chase and the investor group, Equimark said Tuesday it expects losses for 1984 to total $30 million. Most of the losses came from additions to the bank's loan loss reserve in the second quarter. Final figures will be released later this month.

Since 1981, Equimark has lost more than $70 million.

Equimark also raised its estimate of the amount of money it expects to receive as part of a proposal to sell or swap a number of its 78 branch offices.

The corporation now says that proposal, which had a Wednesday deadline to receive bids from other financial institutions, should now bring in excess of $25 million. The original estimate was between $10 million and $25 million.

The agreement with Chase affirms an October agreement in principal. The main features of the agreement are:

* Chase will give up the option it received on the bank in 1981 for bailing Equibank out of deep financial trouble. At the time, Chase provided $75 million in loans, which have since been paid back, and purchased $25 million of preferred stock in both Equimark and Equibank. The option on Pittsburgh's third largest bank was contingent upon changes in the law to permit interstate banking.

* Mr. Lowry's investor group will pay Chase $25 million for 9.3 million shares of Equimark common stock. The common stock will come from converting chase's Equimark preferred stock. …

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