MCorp Halts Payments on Debt to Restructure

MCorp, Texas’s second-largest bank, said Monday that its board will stop paying about $470 million in debt and dividends while it undergoes a recapitalization assisted by the Federal Deposit Insurance Corp.

The banking company, which lost $517 million in the third quarter, requested an unspecified amount of FDIC aid earlier this month in its drive to make itself profitable.

The delay of debt payments will “conserve maximum resources at the parent company,” Chairman Gene Bishop said in a statement. Dallas-based MCorp has lined up $400 million in private capital and $400 million of its own funds for the restructuring, a company spokesman said.

The moratorium covers MCorp’s preferred stock dividends and principal and interest for the parent company’s public and privately placed debt, it said in a statement, and “does not affect the company’s MBanks or customers,” Bishop added.

“Business will continue as usual,” he said. He declined to predict the length of the moratorium or the status of the bank’s recapitalization and FDIC request. The moratorium is effective as of Oct. 21, the company said.

MCorp and other top Texas banks have lost a fortune in recent years as the state’s recession has produced billions in losses from energy and real estate loans. MCorp’s 26 banks had $1.97 billion in non-performing assets as of Sept. 30.