Fremont Delays Interest Payment on $169 Million of Debt
Troubled Fremont General Corporation said Tuesday that it will delay a $6.6 million interest payment on $169.0 million of outstanding debt while it tries to complete a possible debt restructuring. The company said it "is engaged in discussions" with the debt holder, and that it has until April 17 to make the scheduled payment; any delay without refinancing the debt beyond this date would likely put Fremont into an "event of default" on the outstanding debt, it said. Fremont also said it could offer no assurances that it would successfully restructure the debt, or that it would pay the outstanding interest due on it -- a somehwat ominous disclaimer, given current market conditions. Doubly so, considering Fremont's current condition. The troubled former subprime lender has been the subject of ongoing industry speculation recently that it is facing a renewed liquidity crunch. Fremont said on March 4 that it had received default notices from two unnamed third parties that had purchased a total of $3.15 billion of residential subprime mortgages from the lender one year earlier. Fremont has said it is seeking a potential sale of the company, among other options. Disclosure: The author held no positions in FMT when this story was originally published. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.