Accredited Home Lenders, Lone Star amend merger agreement, lower offer price

By Lisa Kerner

Charlotte, N.C., Sept. 19 - Accredited Home Lenders Holding Co. and Lone Star Fund V (U.S.) LP, through its affiliate Lone Star U.S. Acquisitions, LLC, amended their June 4 merger agreement, effectively settling a pending lawsuit between the companies and reducing the offer price to $11.75 from $15.10 per share.

In addition, the offer has been extended to midnight on the tenth business day after Accredited Home Lenders files an amendment to its schedule 14D-9, which was initially filed with the Securities and Exchange Commission in June and explains the basis for the board's recommendation of the merger. The offer was slated to end on Sept. 28.

The acquisition remains structured as an all-cash tender offer for all outstanding shares of Accredited Home Lenders common stock, with the 9¾% series A perpetual cumulative preferred shares of Accredited Mortgage Loan REIT Trust remaining outstanding.

Accredited Home Lenders' board of directors unanimously approved the amended merger agreement.

Most of the original merger agreement's closing conditions were eliminated except for the primary condition: the valid tender of more than 50% of Accredited Home Lenders' outstanding shares.

Lone Star deposited $295 million with the Bank of New York Mellon to fund the offer. The company has also agreed to provide Accredited Home Lenders with $49 million of financing, including $34 million applied to debt, leaving about $15 million of additional liquidity.

"This new agreement fairly settles our dispute and will expedite the completion of the merger with Lone Star," Accredited Home Lenders chairman and chief executive officer James A. Konrath said in a company news release.

"We will now turn to the business of rebuilding Accredited for a brighter future with Lone Star."

It was previously reported that 18,448,957 shares, or about 73.44%, of Accredited Home Lenders' stock had been tendered at the close of business on Sept. 11.

Lone Star filed an amendment to its tender offer on Aug. 10 with the SEC stating that Accredited Home Lenders had not satisfied all closing conditions due in part to the "drastic deterioration in the financial and operational condition of the company."

Piper Jaffray & Co. is acting as dealer manager for the tender offer. The information agent is Georgeson Inc.

Accredited Home Lenders is a San Diego mortgage company, and Accredited Mortgage Loan REIT Trust is a Maryland real estate investment trust formed in May 2004.

Lone Star is a Dallas private equity firm.

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