New Century Financial Corporation (NYSE: NEW) said today that the New York Stock Exchange has halted trading of its stock, including both common and preferred stock. Saying that the NYSE Board had determined that New Century's stock was "no longer suitable for continued listing on the NYSE and will be suspended immediately," the company said the exchange's decision was driven by the company's recent filings with the Securities and Exchange Commission. Yesterday, in a filing with the SEC, New Century disclosed that it faces $8.4 billion in forced loan repurchases from creditors due to cross-default and cross-acceleration terms associated with its short-term debt. This morning, the company filed an amended report with the SEC that said it had originally underestimated its indebtedness to creditor CSFB by $500 million, meaning that the company now faces upward of $9 billion in forced repurchases and associated debt payments.
As a non-depository, originators such as New Century depend on their short-term credit facilities to finance ongoing operations. The reporting snafu disclosed this morning is the latest problem for the besieged subprime mortgage operation. The company had first warned of problems on February 8, when it said it would restate its 2006 earnings due to massive loan repurchases that had outstripped the company's loan loss reserves. Since that time, the company has been quickly caught in what one industry source described to Housing Wire as a "death spiral." The troubled subprime lender, according to most sources HW has spoken with, seems likely to file for bankruptcy protection in the next few days. Full disclosure: The author owns no securities of the publicly-traded corporations discussed in this story.
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