Financier Set to Put $7 Million Into Sun S

Sun Savings & Loan Assn. said Tuesday that it had signed a non-binding letter of intent that could provide a much-needed $7-million cash infusion from a New York financier and boost Sun’s sagging net worth above regulatory minimums.

The letter of intent with Greenfield Partners of New York calls for financier Van D. Greenfield’s firm to buy $7 million in common stock or a combination of stock and debentures, depending on a complicated purchase formula.

The $7-million infusion, if completed, would give Greenfield undisputed control over Sun and raise the troubled S&L;’s net worth to nearly $12.5 million.

That would be slightly above the 3% net worth-to-assets ratio required by regulators, based on an expected asset base of about $410 million at year’s end, according to President and Chief Executive John McEwan, who has made attaining a 3% net worth ratio his primary goal since taking over Sun’s top spot last February.

A definitive agreement must be signed within 30 days, according to the terms of the letter of intent.

In a separate transaction, McEwan said he is negotiating to sell developer Victor Fargo 247,000 shares of Sun common at $10 per share. Added to Greenfield’s $7 million, Fargo’s $2.47-million investment would bring Sun’s capital base to nearly $15 million, or 3.6% of its assets, above the regulatory minimum.

The Fargo investment would include Sun’s leasing of 30,000 square feet of office and branch banking space in Fargo’s new La Jolla office building. Sun would also share in 25% of the building’s profits.

Both Greenfield and Fargo were parties in Sun’s proposed $7.2-million public offering capital plan that failed last month.

Although many of the numbers and details in the current plan are similar to the failed one, this proposal is different because it gives Greenfield major control of Sun.

Indeed, Sun announced Tuesday that Greenfield’s contribution is significant enough that a change-in-control application would have to be filed with the Federal Home Loan Bank Board.

Greenfield could garner as much as 42% of Sun’s common stock, depending on the complicated formula for determining the stock price.

The latest proposal, unlike last month’s failed plan, does not include an option for Fargo to buy up to 500,000 additional shares of Sun common stock.

The stock price formula calls for the purchase price to be the higher of the per-share book value as of Dec. 31 or the average stock price during an undisclosed 20-day period. In either case, the stock price will not be less than $4 per share or more than twice the $4.90-per-share book value.

The difference between the cost of 1.053 million shares and Greenfield’s $7-million investment will be paid to Greenfield with Sun debentures.

Greenfield tried to gain control of Sun one year ago with a $10-million capital investment. That deal was never completed.