Investors Seek New Financing for S
An investor group led by former Treasury Secretary William E. Simon disclosed Wednesday that it must seek new financing for its proposed acquisition of Western Federal Savings & Loan in Marina del Rey.
The new financing--expected to come through a sale of stock and debt securities--is necessary because the group’s original backer ran into financial difficulties.
The change will mean a delay of several months in closing the acquisition to raise the money and secure new regulatory approval.
The transaction was supposed to close this month. But a statement issued by Western Federal said the new closing date is Sept. 22, and added that there can be no assurances that the transaction will close by then.
The group was forced to turn to a stock and debt offering to finance the $150-million transaction as a result of the financial troubles of the Australian firm, Ariadne, which was going to provide the money for the acquisition.
The statement said the investment firm of Drexel Burnham Lambert was confident it could raise $100 million of the purchase price through issuing new stock and debt of the new holding company that will own Western Federal. A source close to the deal said the Simon group plans to raise an additional $77.5 million from private investors.
Last Aug. 24, the Simon group announced an agreement to purchase Western Federal, a healthy thrift with more than $2 billion in assets and 23 branches in Southern California. The price was to be $150 million, or $41 a share. The investors also said they would raise about $25 million in new capital to help the thrift grow.
The source of the financing was not disclosed at the time, but it later was revealed that Ariadne would be providing all the money. But Ariadne’s stock plummeted in the stock market crash last October and its chairman, Bruce R. Judge, a Simon ally, was forced to resign.
The Federal Home Loan Bank, which regulates thrifts and must approve the transaction, sent the purchase application back following the market crash as a result of questions about the ability of Ariadne to provide the funds.
Earlier this year, however, Gerald L. Parsky, a Los Angeles lawyer and one of Simon’s partners in the deal, said in an interview that Ariadne remained committed to the financing and that he expected the deal to be closed by the end of March.
Parsky declined to comment Wednesday.
The Simon partners decided recently that Ariadne’s ability to provide the funds was questionable and the decision was made to go to the market to seek funds through the issuance of stock and debt, according to a person close to the transaction.
It was unclear whether Simon and his partners, who include former Federal Reserve Board Vice Chairman Preston Martin, would provide any of their own money for the deal.
