Accredited Home Lenders
( LEND) surged Tuesday morning after the troubled lender got more financing.
The San Diego-based mortgage company obtained $1.1 billion in warehouse facilities from a "large commercial bank" and through the renewal of an existing loan with one investment bank, it said Monday. The firm is discussing with yet a third lender the possible renewal of $650 million warehouse facility, it said.
At the end of the first quarter, Accredited had $350 million of available cash. The firm had originated $1.8 billion of mortgage loans in the quarter.
Accredited's stock surged $1.41, or 17%, to $9.89 early Tuesday.
The company's financial relief came just hours after rival
New Century Financial
filed for bankruptcy protection.
New Century said it agreed to sell some assets, including its mortgage-servicing platform, for $189 million and cut 3,200 jobs, reducing its workforce by 54%.
Accredited also said Grant Thornton resigned as the company's independent auditors. The company said "there have been no disagreements between the company and Grant Thornton on any matter of accounting principles or practices or financial statement disclosure," though Accredited allowed that Grant Thornton had advised it would have to significantly expand the scope of its audit, given the problems in the subprime lending industry.
( FMT) also said that Grant Thornton resigned as its independent auditor. Fremont said there were no disagreements, but Grant Thornton disagreed with that assertion in a filing with regulators.
Accredited said it closed a previously announced financing transaction in which hedge fund Farallon Capital Management agreed to provide $230 million through a loan term facility. The loans have a five-year term and are secured by Accredited's "pledge of certain subsidiaries" and a "security interest over certain assets."
Farallon also received warrants to acquire 3.23 million shares of Accredited at an exercise price of $10 a share. The warrants are good for 10 years, Accredited says.
As a result of the closing of the Farallon financing and the sale of $2.7 billion in subprime mortgages, Accredited says it has now repaid the "majority" of its warehouse facilities.
"The Farallon loan, along with the restructuring of our warehouse financing capacity and recent loan dispositions, provides Accredited with greater flexibility in originating loans, securitizing ongoing loan production and pursuing various strategic options," said CEO James Konrath.