Accredited Home Lenders Holding (LEND), a subprime mortgage lender that agreed in June to be acquired, said its survival is in doubt and bankruptcy is possible, sending its shares down more than 50%. In its delayed 2006 annual report filed Thursday with the Securities and Exchange Commission, San Diego-based Accredited said it could not guarantee it would remain a going concern as market conditions worsen for subprime lenders.
The company’s plunging stock price it’s gone from near $15 in June to around $5 or less now has raised speculation that Accredited might need to renegotiate its June 4 agreement to be acquired by private equity firm Lone Star. That transaction valued Accredited at $400 million, equal to $15.10 per share.
Dozens of subprime lenders, which make loans to people with less than prime credit, have quit the industry this year as losses and defaults mounted. Several, including New Century Financial, have sought bankruptcy protection. Accredited said it has suffered from the same problems, exacerbated by its October purchase of Aames Investment Corp., a Los Angeles subprime lender. It also said it faces “steeply declining” employee morale.