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 DALLAS, Dec. 30 /PRNewswire/ -- Lomas Financial Corporation today

announced that the U.S. Bankruptcy Court for the Southern District of New York has confirmed the company's plan of reorganization, thereby enabling Lomas to emerge from its Chapter 11 proceedings which were instituted on Sept. 24, 1989.
 Prior to confirmation, the plan had been approved by 80 percent to 100 percent of the holders of each of the company's classes of claims and interests who voted on the plan. It is anticipated that the plan will be consummated in late January 1992.
 The Lomas plan of reorganization provides for the spin-off to Lomas' current stockholders of 81 percent of the capital stock of Vista Properties, Inc., formerly Lomas Realty USA, the company's real estate development subsidiary and the entity which holds most of the company's direct real estate investments. Vista in the future will operate independently of Lomas, although 19 percent of Vista's capital stock will be retained by Lomas. Under the plan of reorganization, $130 million principal amount of secured notes of Vista will be issued in exchange for a portion of Lomas Financial Corporation's outstanding senior debt. Lomas will have no liability related to Vista's notes.
 Through the spin-off of Vista, Lomas Financial Corporation will substantially eliminate its exposure to risks related to direct real estate investments and will refocus its resources and energies on its core continuing businesses, namely, mortgage banking, information systems services and short-term lending.
 At consummation of the plan of reorganization in late January 1992, all outstanding debt and equity securities of Lomas and all other claims will be exchanged for:
 -- $400 million in cash;
 -- $140 million principal amount of the company's convertible notes;
 -- An aggregate of $570 million principal amount of notes to be issued by subsidiaries of the company;
 -- $130 million principal amount of notes to be issued by Vista;
 -- 4.05 million shares of Vista common stock;
 -- 20 million shares of Lomas common stock; and
 -- Warrants to purchase, at $29.75 per share, 7 million additional shares of Lomas common stock.
 After consummation of the plan, the company's consolidated term debt will total $753 million and its stockholders' equity (represented by 20.1 million shares of common stock) will total approximately $341 million.
 Jess Hay, chairman and chief executive officer of Lomas, said, "The plan provides a fair recovery for the company's creditors and stockholders and concurrently enhances enterprise value by providing a capital structure which will enable Lomas to maintain its position as a leader in the mortgage banking industry. We are extremely pleased with the overwhelming support given to the plan by the votes of each of the company's constituent classes. We also are gratified by the court's action in confirming the plan, thereby enabling the company's final exit from its Chapter 11 proceedings in January 1992."
 In commenting further on the financial aspects of the company's plan of reorganization, Hay stated, "The capitalization envisioned by the plan provides financial resources sufficient to enable the company's effective and profitable conduct of its continuing operations. The company's divestitures since fiscal 1989 represent a strategic return to firmer ground from which the company intends to move positively into the future. It reconcentrates the company's energies and resources on businesses which Lomas knows extremely well and on activities in which the company has been engaged throughout its history. These continuing activities include principally:
 -- Mortgage banking, the company's core business featuring currently a $29 billion mortgage servicing portfolio; a $6.7 billion master servicing portfolio; more than $600 million in escrow funds held principally for payment of ad valorem taxes and hazard insurance premiums on properties included in the company's mortgage servicing portfolio; an investment advisory group which now manages two affiliates (Capstead Mortgage Corporation and Tyler Cabot Mortgage Securities Fund) with combined assets of nearly $4 billion; extensive insurance agency and field services operations, and conduit production units which currently are adding an aggregate of more than $400 million per month in single-family mortgage loans to the company's mortgage servicing portfolio.
 -- Information systems services which feature a broad array of products designed to serve the management information and data processing needs of the mortgage finance industry, including mortgage loan servicing, loan production, secondary marketing and master servicing products which the company markets on both a service bureau and licensing basis and which currently are used by 126 commercial banks, savings and loan associations and mortgage banking companies. The company's service bureau now provides data services related to mortgage portfolios which include more than 1.9 million loans with an aggregate unamortized principal balance of more than $93 billion.
 -- The activities of ST Lending, Inc., a recently organized and single-purpose subsidiary through which the company will continue to hold investments in short-term real estate loans, which at Oct. 31, 1991, totaled $297.4 million in principal amount; and in real estate acquired through foreclosure of short-term real estate loans, which at Oct. 31, 1991, was carried in the company's consolidated accounts at $113.5 million. The company intends to liquidate these investments in due course and to apply the proceeds thereof, to the extent required, to retire $240 million principal amount of secured notes to be issued by STL, Inc. as part of the consummation of the company's plan of reorganization. Lomas will have no liability related to the notes of STL, Inc. STL's investments and those of Lomas & Nettleton Mortgage Investors and L&N Housing Corp. will continue to be managed by Lomas Management, Inc., another wholly owned subsidiary of the company."
 Hay concluded, "The Lomas of the future thus retains a very substantial operating and financial base. We, therefore, are pleased, excited, determined and optimistic as we proceed toward our new beginning."
 Confirmation of the company's plan of reorganization constitutes the culmination of 30 months of effort during which the company's operations have been substantially restructured, rationalized and refocused. Since June 30, 1989, the company has sold three of its operating divisions (retail banking, life insurance and commercial leasing) for an aggregate consideration of $826 million, of which $736 million was paid in cash and the balance of which consisted of debt and equity securities of certain of the purchasers. Principally as a result of these divestitures, the company's consolidated debt was reduced by approximately $3.4 billion, from $5.7 billion at June 30, 1989, to approximately $2.3 billion at Sept. 30, 1991.
 During the 27 months since the Chapter 11 proceedings were instituted, the company has accomplished a number of other significant objectives:
 -- It has accumulated more than $450 million in unrestricted cash, of which (under the company's plan of reorganization):
 - approximately $40 million will be applied to pay
 administrative claims, and
 - $360 million will be distributed to creditors.
 -- It has increased the size of its mortgage servicing portfolio -- the primary source of the company's recurring revenues -- by 35 percent from $21.6 billion at Sept. 30, 1989, to a current total in excess of $29 billion.
 -- It has completed and introduced to the mortgage banking industry Lomas Information Systems' (LIS) new IBM-based Excelis mortgage loan servicing system, a technologically and functionally advanced data system designed to serve the rapidly expanding market for increased automation of mortgage servicing functions. The company's $29 billion servicing portfolio was converted to Excelis in June 1991, and the enhanced functionality of the new system is expected to improve the already industry leading efficiency of the company's mortgage servicing operations.
 -- It has rationalized its continuing operations, and in the process of doing so has reduced the number of employees related to those operations by 38.7 percent from a fiscal 1988 peak of 3,754 to a current total of 2,303 employees; has reduced its occupancy expense by more than $3.9 million per year; and has reduced its general corporate expenses from more than $16 million in fiscal 1988 to a current level of approximately $6.6 million.
 -- It has substantially eliminated its exposure to risks related to direct real estate investments by providing in its plan of reorganization for the distribution of 81 percent of the capital stock of its real estate subsidiary to the company's current stockholders and for the distribution of $130 million principal amount of that subsidiary's debt securities to the company's creditors.
 -- It has carefully nurtured the morale of its employees and, as a result, the efficiency and productivity of the company's continuing operations have been enhanced.
 -- And, finally, it has had confirmed a plan of reorganization which when consummated will produce a capital structure carefully tailored to the company's continuing operations.
 As previously indicated, the company's outstanding securities after consummation of the plan will include:
 -- $140 million principal amount of Lomas Financial Corporation's 9 percent senior convertible notes, due 2003 and convertible into 8 million shares of common stock of Lomas.
 -- $240 million principal amount of floating rate secured notes of STL, Inc., a wholly owned and single purpose subsidiary of Lomas created solely to hold the company's investments in short-term real estate loans and related assets, which notes will be non-recourse to Lomas and will be secured by assets of such subsidiary with a book value, after reserves, of approximately $360 million.
 -- $330 million principal amount of notes due 1999 of Lomas Mortgage USA, Inc. (LMUSA), a wholly owned subsidiary of Lomas, bearing interest at rates which increase over time from 10.5 percent to 12.5 percent. The notes are not redeemable prior to Aug. 1, 1992, but are callable at par during the second six months after issuance, at 103 percent of par during the second year, at 107 percent of par during the third year, and thereafter at premiums declining ratably to par in year seven.
 -- 20.1 million shares of common stock.
 -- And, finally, warrants expiring on Oct. 31, 2001, to purchase at $29.75 per share 7 million shares of Lomas' common stock.
 The following table sets forth the projected consolidated capitalization of the company and its operating subsidiaries, adjusted to reflect consummation of the plan of reorganization:
 (Dollars in millions):
 Short-term warehouse debt of Lomas Mortgage USA $145.8
 Term notes payable
 of Lomas Financial Corporation
 -- 9 percent convertible notes due 2003
 of STL, Inc. 140.0
 -- Floating rate (200 basis points over
 90-day LIBOR) secured notes due 1996
 of Lomas Mortgage USA 240.0
 -- Notes due 1999 $330.0
 -- 10 percent note secured by first
 mortgage on the company's headquarters 42.7
 -- Other 2.0 374.7
 Total indebtedness 900.5
 Stockholders' equity (20,132,500 shares of common
 stock to be outstanding at consummation of the
 plan of reorganization) 341.7
 Warrants to purchase, at $29.75 per share,
 7 million additional shares of common stock --
 Total capitalization $1,242.2
 -- Lomas Financial Corporation debt-to-equity 41 pct.
 -- Consolidated term debt-to-equity 221 pct.
 -- Consolidated term debt as a percentage
 of total capitalization 61 pct.
 -0- 12/30/91
 /CONTACT: Kevin McGarry, 214-879-5545; Bert Byerley, 214-879-5588; Gary White, 214-879-5540 or Jess Hay, 214-879-5500, all of Lomas Financial; or Mike Sitrick of Sitrick & Company, 213-788-2850, for Lomas/ CO: Lomas Financial Corporation ST: Texas IN: FIN SU: BCY

CK -- NY041 -- 5774 12/30/91 17:56 EST
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Date:Dec 30, 1991

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