PacificAmerica Announces Clarification of Terms of Acquisition by Fremont General Corporation.WOODLAND HILLS, Calif.--(BUSINESS WIRE)--Oct. 7, 1998-- Anticipated Net Loss for Third Quarter 1998 Due to Delay of Sale of September September: see month. Loan Production; and Margin Call Selling Which May Have Impacted Trading Volume Trading volume The number of shares transacted every day. As there is a seller for every buyer, one can think of the trading volume as half of the number of shares transacted. That is, if A sells 100 shares to B, the volume is 100 shares. and Stock Price PacificAmerica Money Center, Inc. (Nasdaq: PAMM PAMM Program Against Micronutrient Malnutrition PAMM Pan-Asian Modified Mediterranean Diet PAMM Physical Access and Media Management PAMM Percent Allocation Money Management ) announced today a clarification of the revised terms of acquisition by Fremont Fremont (frē`mŏnt). 1 City (1990 pop. 173,339), Alameda co., W Calif., on San Francisco Bay; inc. 1956. Long an agricultural center, with champagne vineyards founded (1870) by Leland Stanford, it still ships fruits and vegetables. General Corporation. As previously announced on October October: see month. 5, 1998, the $6 per share initial payment of the maximum $10 price per share to be paid by Fremont for the acquisition of PAMM is subject to reduction by the amount, if any, by which the proceeds from a sale of the interest-only strip Interest-only strip (IO) A security based solely on the interest payments from a pool of mortgages, Treasury bonds, or other bonds. Once the principal on the mortgages or bonds has been repaid, interest payments stop, and the value of the IO falls to zero. receivable held by PAMM are less than a mutually agreed upon Adj. 1. agreed upon - constituted or contracted by stipulation or agreement; "stipulatory obligations" stipulatory noncontroversial, uncontroversial - not likely to arouse controversy amount. PAMM and Fremont have agreed that the initial $6 per share price will not be reduced unless the proceeds from the sale of the receivable are less than approximately 50% of the current book value of the receivable. Given the current uncertainty and illiquidity of the market for these assets, there can be no assurance of the price at which this receivable may be sold, or that it may be sold at all. The required sale of the receivable may delay or prevent the closing of the transaction. It is currently anticipated that a definitive agreement may be entered into by October 31, 1998. The transaction is still subject to a number of conditions, including completion of satisfactory due diligence Research; analysis; your homework. This term has caught on in all industries, because it sounds so "wired." Who would want to do analysis or research when they can do due diligence. See wired. , negotiation of a satisfactory definitive agreement, receipt of a fairness opinion Fairness Opinion A report put together by qualified analysts or advisors providing to key decision makers an evaluation of and facts about a merger or acquisition. Notes: A fairness opinion serves as a document used for guidance in a merger, takeover, or acquisition. , receipt of approval of a majority of PAMM stockholders and regulatory approval. There can be no assurance that the transaction will be completed on the proposed terms, or at all. PAMM also announced that it expects to report an anticipated consolidated net loss for the quarter ended September 30, 1998, due primarily to a delay in the sale of September 1998 loan production. As a result of this delay, gain on sale income for the third quarter will reflect only the sale of August and July loan production. It is anticipated that September loan production will be sold in the fourth quarter of 1998. The Company sold a total of $234 million of loans in the third quarter. All of the loans were sold to a major investment bank for cash at a weighted average price of 105.87% of par value. This purchaser advised the Company in September that it had determined 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: purchasing loans for cash due to current excess inventory. The Company has received several indications of interest from new potential purchasers of its loans, but has not received indicative bids as of this date. The Company expects to receive indicative bids within the next one to two weeks for its loans held for sale, totaling $121 million at September 30, 1998. Loan originations The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. for the quarter and the nine months ended September 30, 1998 significantly increased from the second quarter 1998 and the 1997 comparable periods, as illustrated by the following table: -0-
LOAN ORIGINATIONS AND SALES
(Dollars in Thousands)
Three Months Three Months Nine Months
Ended Ended Ended
9/98 9/97 %inc 9/98 6/98 %inc 9/98 9/97 %inc
Originations:
Wholesale $235 $156 51% $235 $223 5% $611 $423 44%
Retail $ 86 $ 36 139% $ 86 $ 64 34% $202 $115 76%
Total $321 $192 67% $321 $287 12% $813 $538 51%
Sold &
Securitized $234 $210 11% $234(a)$280 (16%) $724 $513 41%
(a) Does not include approximately $103 million of loans produced
in September 1998.
PAMM further reported that the volume of trading in its common stock and the reduction in stock price that occurred early today may be due in part to margin call selling. Due to the reduction in price which occurred yesterday and today, it appears that a number of PAMM stockholders, including some company affiliates, have been required to meet margin calls. This activity may have been responsible for the higher than average volume of trading in the stock and additional pressure on the stock price. Except for historical information contained herein, statements in this news release are 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. that involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks include, among others, risks of inability to complete loan sales upon terms proposed or at all; risk of inability to meet loan production or cost reduction goals; risk of failure to obtain regulatory approval for capital plan; risk of loss on interest-only strips receivable resulting from differences between actual and assumed 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. or loss experience; risks of required pay down of financing (if obtained) upon reduction in value of interest-only strips; risk of further changes in accounting methods for interest-only strips receivable; loan delinquencies and defaults; possible decline of collateral values for loans; fluctuations in interest rates; increased competition in the lending industry resulting in lower lending rates and/or reduced loan originations; and possible regulatory enforcement actions and legislative action. For more complete information concerning factors which could affect the Company's financial results, reference is made to the Company's 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. for the year ended December 31, 1997, and other reports filed with the Securities and Exchange Commission. |
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