Disclosing a liquidity crisis at acquisition target Fieldstone Investment Corporation (NASDAQ:FICC), officials at Credit-Based Asset Servicing and Securitization (C-BASS) said Friday that the company has reduced its per-share buyout of the subprime lender to $4.00 per share. C-BASS had originally announced on February 16 that it would purchase Fieldstone for $5.53 per share, in a deal worth an estimated $260 million. Officials at C-BASS said the reduction in purchase price reflects costs it will incur to provide Fieldstone with needed additional liquidity ahead of the acquisition's completion, and that Fieldstone will sell securities and mortgage loans to C-BASS in order to generate liquidity. C-BASS is one of the nation's largest servicers and securitizers of subprime and scratch-and-dent residential loans, and is an affiliate of mortgage insurance giants MGIC (NYSE:MTG) and Radian Group Inc. (NYSE:RDN).
"The recent severe deterioration of the market for subprime loans has sharply reduced our liquidity and has required us to reduce our merger price in exchange for immediate added liquidity prior to completing our proposed merger with C-BASS," said Michael Sonnenfeld, Fieldstone's president and CEO. Completion of the merger remains contingent on various closing conditions, including regulatory approvals, certain consents of third parties and the approval of holders of a majority of Fieldstone's outstanding common stock. Fieldstone's stockholders will be asked to vote to approve the proposed transaction at a special meeting to be announced.