Preferred Credit Corp., a consumer lending company, is seeking to raise about $95 million through an initial public offering for about 29.4% of its common stock.
The company plans to sell 5 million shares at $20 to $23 per share, according to documents filed Tuesday with the Securities and Exchange Commission. At $23 a share, the company would have a market value of about $391 million. Preferred expects to raise about $95.4 million after expenses through the IPO, assuming a share price of $21.50.
The company would use $27.4 million to repay debt and $52 million to fund expenses tied to the packaging of mortgages into securities. The company would devote the balance to acquiring loans, opening new retail branches, and for general corporate purposes.
Founded in 1989, Preferred provides second mortgages to homeowners with average to superior credit. Annual loan production volume increased to $596.9 million in 1996 from $16.5 million in 1994.
Net income rose to $9.68 million during the first quarter of 1997 from $524,000 during the same period last year. Revenue rose to $23.19 million during the 1997 quarter from $2.99 million during the comparable 1996 period.
Todd Rodriguez, the company’s chairman and chief executive, has more than 10 years of experience in the mortgage banking industry, according to the SEC filing. He will hold a 35% stake in Preferred after the stock sale.
The public offering will include 4.77 million shares that the company plans to sell and 225,000 shares that companies affiliated with Merrill Lynch & Co. are going to offer. Preferred won’t receive any proceeds from the shares sold by the Merrill affiliates.
Keefe, Bruyette & Woods Inc. and Piper Jaffray Inc. plan to underwrite the stock sale for Preferred, shares of which will trade on the Nasdaq market under the symbol PREF.