Accredited Closes Farallon Financing; Updates Corporate Developments.SAN DIEGO San Diego (săn dēā`gō), city (1990 pop. 1,110,549), seat of San Diego co., S Calif., on San Diego Bay; inc. 1850. San Diego includes the unincorporated communities of La Jolla and Spring Valley. Coronado is across the bay. -- Accredited accredited recognition by an appropriate authority that the performance of a particular institution has satisfied a prestated set of criteria. accredited herds cattle herds which have achieved a low level of reactors to, e.g. Home Lenders Holding Co. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : LEND) ("Accredited" or "Company"), a mortgage company specializing in non-prime residential mortgage loans, today announced it has closed the previously proposed financing transaction with Farallon Capital Management[R], L.L.C. and related entities ("Farallon"). Accredited also provided an update on the Company's liquidity, the Company's business, developments with respect to the Company's independent auditors Independent Auditor An external auditor with a certified public accounting designation that qualifies him or her to provide an auditor's report. Notes: These auditors aren't affiliated with the company being audited. , and other matters. Closing of Farallon Financing The Company has closed a $230 million term loan facility provided by Farallon. The loans under the facility have a five-year term and may be repaid by Accredited at any time over the life of the loan, subject to certain conditions and prepayment Prepayment 1. The payment of a debt obligation prior to its due date. 2. The excess payment over a scheduled debt repayment amount. Notes: 1. Examples include deferred expenses such as rent and early loan repayments. 2. fees. The loans are secured by a pledge of certain subsidiaries, including all domestic subsidiaries, and a security interest over certain assets. In connection with the financing, Farallon received warrants to acquire approximately 3.23 million shares of the Company's stock at an exercise price of $10 per share. The warrants will expire in ten years from the issuance date. As contemplated, Farallon also was granted certain preemptive rights The privilege of a stockholder to maintain a proportionate share of the ownership of a corporation by purchasing a proportionate share of any new stock issues. In most jurisdictions, an existing stockholder has the right to buy additional shares of a new issue to preserve , registration rights and board observer rights. Proceeds of the term loan can be used for general working capital, the funding of mortgage loans, and other corporate needs. Farallon manages equity capital for institutions and high net worth individuals and is headquartered in San Francisco, California “San Francisco” redirects here. For other uses, see San Francisco (disambiguation). The City and County of San Francisco (EN IPA: [sænfrənˈsɪskoʊ] . Farallon is a registered investment advisor Registered Investment Advisor (RIA) is a designation obtainable in the United States by an individual who has registered with the U.S. Securities and Exchange Commission or state regulatory agency (where the primary business is situated or multiple States in some cases) in with the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Securities and Exchange Commission ("SEC"). Other Liquidity Developments In addition, Accredited announced the following developments regarding its available financing capacity: * Accredited has obtained a new $500 million warehouse facility from a large commercial bank and renewed one of its existing warehouse facilities with an investment banking firm for $600 million. The Company is also in discussions with another investment banking firm regarding the possible renewal of an existing $650 million warehouse facility. * As a result of the previously announced sale of $2.7 billion of loans and the closing of the Farallon term loan, Accredited repaid the majority of its warehouse facilities. The Company terminated four warehouse lines after repayment of these facilities in full. In addition, Accredited has received further waivers of certain covenants on three of its warehouse facilities, which have a combined total of approximately $100 million in outstanding advances at March 31, 2007. Accredited has agreed with these lenders that Accredited will not draw down additional borrowings under the facilities at the current time. The Company plans to sell much of the collateral in these warehouse lines in the ordinary course of business, as described below in the "Loan Dispositions" section. After the loan sales are completed and these three facilities are repaid in full, these facilities may be terminated or renewed. Certain of these lenders have indicated a willingness to renew their facilities with the Company. * In addition, Accredited has sold all the mortgage loans collateralizing its asset-backed commercial paper program and has collateralized the remaining $80 million in commercial paper notes outstanding with cash. The Company has agreed with the swap counterparties Counterparties The parties on either side of an interest rate swap or a currency, equity or commodity swap, or to an options or futures position. supporting the asset-backed commercial paper program to discontinue dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: current use of the commercial paper conduit conduit /con·du·it/ (kon´doo-it) channel. ileal conduit the surgical anastomosis of the ureters to one end of a detached segment of ileum, the other end being used to form a stoma on the . Accredited will consider reactivating or terminating the program depending upon future market conditions and the availability of various credit providers. If the program is terminated, the Company intends to repay the commercial paper outstanding with the cash held as collateral in the conduit. As a result of the developments outlined above, the Company has approximately $350 million of available cash on hand at March 31, 2007, not including the cash collateralizing the asset-backed commercial paper program. Originations The Company reported that it originated approximately $1.8 billion of mortgage loans in the U.S. and Canada during the quarter ended March 31, 2007. Loan Dispositions As previously announced, the Company closed a $760 million asset-backed, on-balance sheet securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. on January 30, 2007. The Company intends to evaluate additional securitizations as an alternative to whole loan sales in the future. Accredited sold approximately $800 million and, as previously disclosed, $2.7 billion of mortgage loans for cash in the first quarter of 2007. The approximately $800 million sold at a weighted average net price of 100.63%. The $2.7 billion sale in March included substantially all performing and non-performing loans A non-performing loan is a loan that is in default or close to being in default. Many loans become non-performing after being in default for 3 months, but this can depend on the contract terms. in inventory on March 6, 2007 and will result in a pre-tax charge of approximately $160 million. In March, the Company signed a $400 million forward sale agreement, priced at 100.625%, for loans to be delivered in the second quarter. Company Outlook Commenting on all of the recent developments at Accredited, Chairman and Chief Executive Officer James A. Konrath remarked, "We are pleased with the closing of the term loan with Farallon. The loan is a key component of our plan to improve the Company's liquidity in order to maneuver maneuver /ma·neu·ver/ (mah-noo´ver) a skillful or dextrous method or procedure. Bracht's maneuver a method of extraction of the aftercoming head in breech presentation. in a non-prime mortgage market that has become even more turbulent than the market we described in our conference call on February 14, 2007. The Farallon loan, along with the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). of our warehouse financing capacity and recent loan dispositions, provides Accredited with greater flexibility in originating loans, securitizing ongoing loan production, and pursuing various strategic options." Relationship with Auditors On March 27, 2007, Grant Thornton LLP  This article or section is written like an .Please help [ rewrite this article] from a neutral point of view. Mark blatant advertising for , using . ("Grant Thornton"), the registered independent public accounting firm for Accredited, orally advised the audit committee of the Company of its intent to resign as the Company's independent auditors. Grant Thornton also advised the Company at that time that it did not intend to complete its audit of the Company's financial statements for the year ended December 31, 2006. The audit committee was in discussions with Grant Thornton to reconsider re·con·sid·er v. re·con·sid·ered, re·con·sid·er·ing, re·con·sid·ers v.tr. 1. To consider again, especially with intent to alter or modify a previous decision. 2. their decision, but on March 30, 2007, Grant Thornton provided the Company's audit committee with a letter dated March 27, 2007 regarding its resignation as the Company's independent auditors. The Company's audit committee did not request or approve the resignation of Grant Thornton. The Company's audit committee voluntarily reported Grant Thornton's resignation to the SEC. In addition, the Company's audit committee is reviewing the circumstances relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc Grant Thornton's resignation. The Company's audit committee has begun the process of selecting a new registered public accounting firm with the objective of engaging a new accounting firm as quickly as possible. No assurance can be given as to when a new auditing firm might be engaged. Grant Thornton's audit report on the Company's consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge as of and for the year ended December 31, 2005 did not contain an adverse opinion or disclaimer of opinion Disclaimer of opinion An auditor's statement that does not express any opinion regarding the company's financial condition. disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope, or accounting principles. During the period from June 14, 2005 (the date that Grant Thornton was engaged as auditor) through December 31, 2005, and during the period from January 1, 2006 to the present, there have been no disagreements between the Company and Grant Thornton on any matter of accounting principles or practices or financial statement disclosure. In connection with its resignation, Grant Thornton did advise the Company that it believed it would have had to significantly expand the scope of its audit of the Company's financial statements for the year ended December 31, 2006. Accredited is reviewing the potential impact of Grant Thornton's resignation on a variety of issues, including the obligation of the Company to provide Regulation AB certifications with respect to its securitizations, requirements under certain state and provincial regulatory licenses to provide annual audited financial statements, and the effect of the additional delay in completing its 2006 audit on its NASDAQ listing status, among others. Accredited has contacted most state regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities regarding the delay in filing its Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. . The Company has been orally told by the regulatory authorities in affected states that they will allow the Company additional time to complete its year-end audit. The Company intends to continue its origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real operations during this period. Pursuing Strategic Options Accredited is continuing to work with its financial and legal advisors to explore various strategic options. Strategic options could include, but are not limited to, raising additional capital, a merger, or other strategic transaction. There can be no assurance that the Company's pursuit of strategic options will result in any transactions being consummated con·sum·mate tr.v. con·sum·mat·ed, con·sum·mat·ing, con·sum·mates 1. a. To bring to completion or fruition; conclude: consummate a business transaction. b. . About Accredited Accredited Home Lenders Holding Co. is a mortgage company operating throughout the U.S. and in Canada. Accredited originates, finances, securitizes, services, and sells non-prime mortgage loans secured by residential real estate. Founded in 1990, the company is headquartered in San Diego. Additional information may be found at www.accredhome.com. About Farallon Farallon Capital Management, L.L.C. was founded in 1986 by Thomas F. Steyer. The firm manages equity capital for institutions and high net worth individuals. Farallon's institutional investors Institutional Investor A non-bank person or organization that trades securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. are primarily college endowments and foundations. Farallon employs approximately 120 people in its headquarters in San Francisco, California. Farallon is a registered investment advisor with the United States Securities and Exchange Commission. Forward Looking Statements This release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, including statements regarding the manner in which the Company may use the proceeds of the Company's term loans from Farallon, statements regarding developments and plans concerning the Company's financing capacity (including, without limitation, the Company's plans to sell collateral securing certain warehouse lines and repay amounts outstanding under these lines, the possibility of the Company entering into new warehouse lines or renewing existing warehouse lines and the Company's plans with respect to its asset-backed commercial paper program); statements regarding the Company's loan disposition strategy, including its forward sale agreement and evaluation of additional securitizations; statements regarding the Company's outlook; statements regarding the cessation cessation Vox populi The stopping of a thing. See Smoking cessation. of the Company's relationship with Grant Thornton, efforts by the Company's independent audit committee to engage a new independent registered accounting firm and the potential impact of termination of the Company's relationship with Grant Thornton on a variety of issues; and statements regarding the Company's exploration and pursuit of strategic options. These forward-looking statements involve a number of risks and uncertainties. These risks and uncertainties include, among other things, risks and uncertainties relating to the Company's ability to repay the Farallon loans and comply with the terms of the Company's agreements with Farallon, and risks and uncertainties relating to the use of proceeds from the Farallon loans; risks and uncertainties relating to the Company's ability to enter into new or renew existing warehouse facilities or other financing facilities, remain in compliance with the terms of such warehouse or other facilities, receive further waivers or enter into additional standstill agreements Standstill agreement Contract by which the bidding firm in a takeover attempt agrees to limit its holdings of another firm. standstill agreement with lenders as necessary, the Company's ability to sell loans in warehouse facilities with standstill agreements and repay the borrowings outstanding under such warehouse facilities, and the Company's ability to repay amounts outstanding, and discontinue or re-activate use of, the Company's asset-backed commercial paper program; risks and uncertainties relating to the Company's ability to deliver loans pursuant to the forward sale agreement and execute future whole loan sales and securitizations; risks and uncertainties relating to the Company's ability to engage a new independent registered accounting firm, complete its 2006 audit, file its annual report on Form 10-K for the period ended December 31, 2006 and make other regulatory filings, provide Regulation AB certifications and work with state regulatory authorities to continue origination operations; and risks and uncertainties relating to the Company's ability to accomplish strategic options, originate o·rig·i·nate v. 1. To bring into being; create. 2. To come into being; start. loans; grow its asset-backed portfolio or take advantage of opportunities; and other risks and uncertainties identified in the risk factors and other disclosures in Accredited Home Lenders Holding Co.'s annual report on Form 10-K for the period ended December 31, 2005, its reports on Form 10-Q Form 10-Q See 10-Q. for the first, second and third quarters of 2006, and in other documents filed by the Company with the SEC. These and other factors could cause the Company's actual results to differ materially from what it projects or anticipates in its forward-looking statements. The Company cautions readers that the non-prime mortgage industry and the Company's business are subject to numerous significant risks and uncertainties. |
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