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Sallie Mae to pursue 'all available recourse' after buyer group fails to submit new offer
By Lisa Kerner
Charlotte, N.C., Dec. 12 - SLM Corp. (Sallie Mae) responded to reports in the marketplace regarding its buyout by an investor group led by J.C. Flowers, Bank of America and JPMorgan Chase.
The buyer group turned down Sallie Mae's offer of a possible alternative transaction with the opportunity to update their due diligence and submit a new proposal, according to a company news release.
Sallie Mae's board said it remains committed to protecting its shareholders' rights. As a result, the board will "pursue all available recourse" including Sallie Mae's existing lawsuit against the buyer group.
Sallie Mae said it has indications of interest from 10 financial institutions for new secured warehouse funding "significantly in excess of $30 billion."
The company also announced it expects fourth-quarter core earnings per diluted share to be in the range of $0.52 to $0.57.
On Oct. 15, the investor group offered to terminate its merger agreement with Sallie Mae under the belief that Sallie Mae had suffered a "material adverse effect" as defined under the agreement.
It was previously reported that J.C. Flowers also disputes Sallie Mae's claim that it is entitled to a $900 million termination fee.
Sallie Mae filed a lawsuit in Delaware Chancery Court against the buyer group seeking a declaration that the buyer group has repudiated its merger agreement. On Sept. 26, the buyer group said it no longer planned to close the proposed deal to take Sallie Mae private.
The merger had been set to close Nov. 5.
Sallie Mae provides saving- and paying-for-college programs and is based in Reston, Va.
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