Fremont General to delay payment to lenders
Former sub-prime mortgage lender Fremont General Corp. said Tuesday that it was trying to restructure some of its debt and would delay making a $6.6-million payment during the negotiations.
If payment is not made within a month, the Brea-based company could be declared in default on $169 million in senior notes that are due in a year.
Fremont, whose bank subsidiary was one of the country’s biggest sub-prime lenders until regulators forced it out of that business last year, has been caught in a cash crunch.
It delayed payments on some subordinated debt last month, saying it “has significant liquidity risk as a result of limited sources of cash available to satisfy its obligations.”
The holding company recently moved its offices from Santa Monica to Brea, where its operating subsidiary, the bank Fremont Investment & Loan, is based.
Fremont Investment & Loan’s equity capital had shrunk to $448 million at the end of 2007, according to a recent report to bank regulators, down from more than $1.3 billion at the end of 2006.
The company, however, warned investors March 12 that its financial results probably would have to be restated. It said it could not file its annual financial report on time because it was still trying to calculate its losses and set a realistic value for its remaining assets.
Fremont said Tuesday that it was continuing “to evaluate other strategic alternatives” to beef up capital at the bank and the holding company, as well as a possible sale of the firm or its assets.
Fremont Investment & Loan’s retail banking division continues to offer savings, money market accounts and certificates of deposit through its 22 branches.
The deposits are fully insured by the Federal Deposit Insurance Corp. up to $100,000 per depositor. Retirement accounts are insured up to an additional $250,000.
The FDIC’s toll-free number is (877) ASK-FDIC.
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