American Continental’s Planned Sale of Lincoln Savings Hits Some Snags

American Continental Corp. in Phoenix was hoping for a smooth exit from the savings and loan industry through its pending sale of Lincoln Savings & Loan in Irvine.

But the sale to an investor group headed by Spencer Scott in Glendale has hit a few snags, some of which may be straightened out more easily than others.

American Continental executives figured the sale would be completed by the end of this month, but the state Department of Savings and Loan said it was impossible for the agency to rule that soon on Scott’s application because it is incomplete.

William B. Davis, chief deputy commissioner of the state agency, said there are “holes in the filing” that must be plugged with information from Scott. Federal regulators have not yet completed their review of the application either.

The state agency also isn’t crazy about Scott’s request that, at the federal level, Lincoln be supervised by regulators from Seattle instead of San Francisco, the main office for federal supervision of S&Ls; in California.

Of more concern to American Continental, though, is a foreclosure suit filed last week by the general contractor for one of the S&L;’s major assets, the Phoenician Resort in Scottsdale. The resort is not only a point of contention between regulators and Lincoln executives, it is an element of American Continental’s agreement with Scott.

That sales agreement calls for American Continental to buy the resort from Lincoln.

Last week, McCarthy Western Constructors Inc. sued to foreclose on the recently completed $250-million resort for failure to pay $18.5 million in construction costs. McCarthy, which has already been paid more than $135 million for putting up the resort, had filed a mechanic’s lien last October for the remaining amount due.

Richard J. Kielty, American Continental’s senior vice president and general counsel, said the “routine” mechanic’s lien would be paid from an escrow account once the contractor has repaired damaged and non-functional work.

Lincoln plans to countersue McCarthy, he said, but he expected the matter to be settled. The foreclosure suit should not affect the sale of Lincoln to Scott’s group, he said.