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NORTHEAST FEDERAL CORP. ANNOUNCES AGREEMENT TO ACQUIRE FOUR RHODE ISLAND FINANCIAL INSTITUTIONS

 NORTHEAST FEDERAL CORP. ANNOUNCES AGREEMENT
 TO ACQUIRE FOUR RHODE ISLAND FINANCIAL INSTITUTIONS
 HARTFORD, Conn., Jan. 13 /PRNewswire/ -- The Boards of Directors of Northeast Federal Corp. (the "Company") (NYSE: NSB), and its subsidiary, Northeast Savings, F.A. (the "Association"), approved today transactions which have been negotiated with the State of Rhode Island, the Rhode Island Depositors Economic Protection Corporation ("DEPCO") and the receivers (the "Receivers") for four Rhode Island financial institutions which are in receivership proceedings under the jurisdiction of the Superior Court of Providence County, Rhode Island (the "Court"). The institutions involved are the East Providence Credit Union, Providence Teachers Credit Union, Columbian Credit Union, and Greater Providence Deposit Corporation and certain of its affiliated entities (the "Credit Unions").
 The transactions would involve, among other things, the acquisition by the Association of approximately $325 million of assets of the Credit Unions from the Receivers and the issuance by the Association of approximately $325 million of insured deposit accounts in the Association to depositors in the Credit Unions. The Association would open branch banking offices in Rhode Island.
 Northeast Federal Corp. would issue and sell to DEPCO approximately $35 million of a new class of preferred stock, the $8.50 Cumulative Preferred Stock, Series B (the "New Preferred Stock") and warrants to purchase 600,000 shares of Common Stock of the Company at $2.50 per share, and would contribute the net proceeds to the Association. The New Preferred Stock would be junior in right to payment of dividends on the Company's $2.25 Cumulative Convertible Preferred Stock, Series A, and the Company has the right to pay the first five years of dividends on the New Preferred Stock by the issuance of additional New Preferred Stock (a payment in kind). The Company would also issue and sell $24 million of 9 percent Sinking Fund Uncertificated Debentures, Due in 2012 (the "Debentures") to the Receivers, who would distribute such Debentures to certain of the depositors in the Credit Unions in consideration of a portion of their deposit claims against the receiverships for the Credit Unions. The Company has the right to pay the first five years of interest on the debentures by the issuance of additional debentures (a payment in kind).
 George P. Rutland, chairman and chief executive officer of Northeast Federal Corp. said "We are pleased to have reached an agreement on the acquisition of these four institutions. Representatives of the state worked well together with us, and I would like to thank the officials of the State of Rhode Island in putting this transaction together," Rutland went on to say.
 Consummation of the transactions is subject to various conditions and uncertainties, including among other things: requisite approvals by the Office of Thrift Supervision and the Federal Deposit Insurance Corporation; the FSLIC Resolution Fund agreeing to a repurchase by the company of its outstanding shares of Adjustable Rate Cumulative Preferred Stock, Series A, held by the FSLIC Resolution Fund; the receipt of a private letter ruling from the Internal Revenue Service; qualification of the Indenture governing the Debentures under the Trust Indenture Act of 1939, administered by the Securities and Exchange Commission; the approval of DEPCO's Board of Directors; and ultimately, upon approval by the Court after notice of and a hearing on the fairness of the transactions involving the receiverships.
 Northeast Savings, F.A., a subsidiary of Northeast Federal Corp., is one of the largest thrift institutions based in New England, with 158 years of continuous service to its customers. Northeast Savings operates a total of 42 branch offices in New York, Connecticut, and Massachusetts, as well as mortgage lending offices in California through a subsidiary.
 -0- 1/13/92
 /CONTACT: George P. Rutland, chairman of the board and chief executive officer, 208-280-1100; or Kirk W. Walters, president, chief operating officer and chief financial officer, 203-280-1183, both of Northeast Federal Corp./
 (NSB) CO: Northeast Federal Corp. ST: Connecticut IN: FIN SU: TNM


DD -- NE002 -- 9067 01/13/92 11:55 EST
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Publication:PR Newswire
Date:Jan 13, 1992
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