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BONDHOLDER STEERING COMMITTEE ANNOUNCES SUPPORT OF CALFED INC. EXCHANGE OFFER

 BONDHOLDER STEERING COMMITTEE ANNOUNCES SUPPORT
 OF CALFED INC. EXCHANGE OFFER
 LOS ANGELES, Nov. 3 /PRNewswire/ -- Yesterday, a Steering Committee composed of five institutional investors which collectively hold $47.2 million of CalFed Inc.'s (NYSE: CAL) $122.6 million principal amount, 6 1/2 percent convertible debentures indicated unanimous support for the company's second amended exchange offer filed Nov. 2, 1992, with the Office of Thrift Supervision, the agency that regulates savings and loan associations. The exchange offer resolves a year-long question of whether CalFed Inc., will satisfy an impending bond obligation or recapitalize its wholly owned subsidiary, California Federal Bank. California Federal Bank provides home mortgage loans and consumer banking services through 170 offices in California, Florida, Nevada and Georgia.
 The exchange offer provides that upon 100 percent acceptance, tendering bondholders will receive approximately 78.6 percent of the stock in California Federal Bank, the principal subsidiary of CalFed Inc., and $17.6 million principal amount in new 10 percent debentures due 2002, while shareholders will receive 20.6 percent of the stock of the bank and warrants to purchase an additional 10 percent of the fully diluted equity. The exchange offer is conditioned upon a 90 percent level of acceptance by bondholders. As a result of the exchange offer, California Federal Bank will receive an infusion of more than $150 million, thereby achieving year-end regulatory capital levels in excess of statutory requirements.
 Cary Stanford, vice president of Houlihan Lokey Howard & Zukin Inc., the financial advisor retained by the Steering Committee to negotiate terms on its behalf, said, "Given the anticipated values of the stock and bonds received by tendering bondholders, we believe acceptance levels in excess of 90 percent are achievable." Chairman of the Steering Committee, Herb Stiles of T. Rowe Price, said today, "We are extremely pleased with the offer and intend to tender all our bonds." In order to satisfy an OTS mandate formally agreed to by the bank, the exchange offer must be consummated prior to Dec. 31, 1992. Failure to do so will subject the bank to OTS sanctions.
 The exchange offer resolves an unusual situation: The holding company, CalFed Inc., has sufficient capital to either materially recapitalize its subsidiary bank or fulfill an impending debenture obligation, but not both. The critical factor was that the convertible debentures could be put back (sold) by holders to the company at 123 percent of par on Feb. 20, 1993.
 In November 1991, the OTS proposed an individual minimum capital requirement for California Federal Bank which, if adopted, would have required it to raise $375 million in additional capital, resulting in regulatory capital ratios that were substantially in excess of those required by statute. In June of this year the proposal was withdrawn, and subsequently, the bank entered into a Capital Plan Agreement that provided, among other things, that the bank's parent company effect an exchange offer and capital infusion via a merger whereby CalFed Inc. will become a subsidiary of California Federal Bank by Dec. 31, 1992. The OTS has indicated that failure to complete the deal by Dec. 31, 1992, will possibly result in sanctions, including its seeking to permanently enjoin all payments to bondholders.
 Based on possible values of the bank, which are reflected in the exchange offer, tendering bondholders could end up with securities equal in value to the full put value (123 percent of par), and shareholders could end up with a large equity stake in a substantially more valuable bank that would exceed its regulatory capital requirements. "This unusual dynamic between the put obligation on the debentures and the OTS requirements gave rise to an exchange offer that represents a win-win situation for bondholders and shareholders," said Jeffrey I. Werbalowsky, managing director at Houlihan Lokey.
 While the terms have been structured to provide an incentive for all bondholders to tender into the exchange offer, they also provide a dis-incentive for bondholders who do not participate. These bondholders would suffer a seven-year deferral until Feb. 20, 2000, of their ability to put their bonds to the company. In addition, it is not clear that the interest on their bonds will continue to be paid without prior OTS approval.
 Houlihan Lokey Howard & Zukin Inc., which recently advised bondholders in the successful out-of-court exchange offer of WestFed Holdings Inc., provides financial advisory and investment banking services through its offices located in Los Angeles, New York, San Francisco, Chicago and Minneapolis.
 -0- 11/3/92
 /CONTACT: Cary J. Stanford, VP of Houlihan Lokey Howard & Zukin, 310-553-8871/
 (CAL) CO: CalFed Inc.; Houlihan Lokey Howard & Zukin Inc. ST: California IN: FIN SU:


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Date:Nov 3, 1992
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