Defunct subprime lender New Century Financial reported yesterday that hedge fund Carrington Capital Management LLC won its previously-announced auction for the Irvine, Calif.-based lender's servicing operation. But here's the really interesting part:
The new purchase price was reached following an auction involving multiple bidders, and represents an increase of approximately 35% from the initial $139 million offer made by Carrington, when the Company initially filed for chapter 11 protection on April 2, 2007.
Was Carrington intentionally low-balling in its first offer? (It sure looks like it now.) I'd have to see the MSRs on the books and a few other key financial metrics to get an idea of what this purchase price really means, but I can't seem to locate any of this information. If I do, this post will be updated. And who else drove up the bidding price? Inquiring minds would love to know.