Long Beach Financial Drops Price of IPO Shares to $6.50

Long Beach Financial Corp., a provider of so-called subprime loans, said Monday that it now anticipates going public at nearly half the price it once envisioned.

Long Beach Financial, created by Long Beach Mortgage Co. in Orange, said it plans to offer 21.75 million shares in its initial public offering at $6.50 a share.

Such a sale would gross $141.4 million for Long Beach Financial--a far cry from up to $261 million it expected from its original price range of $10 to $12 a share. Only last week, the provider of mortgages to those with little or poor credit had dropped its anticipated price range to $8 to $9 a share.

Analysts say that rising interest rates have hurt demand for stock in financial companies, even though subprime mortgage lending has been an increasingly hot market spurring consolidations and new offerings.

Tax preparer H&R; Block Inc., for instance, has said it will acquire Option One Mortgage Corp. in Santa Ana for $190 million. And last week, New Century Financial Corp. in Newport Beach said it will offer an as-yet undetermined number of shares to raise as much as $41.86 million.

But, with rising rates, initial public offerings are becoming a tougher sell to a Wall Street battered by slumping indexes and to stingier mutual fund managers. Companies and their underwriters are cutting prices and reducing the number of shares offered--even postponing offerings to hoped-for better days.