By Sheri Kasprzak
New York, May 22 - Fremont General Corp. announced plans to conduct an $80 million private placement of exchangeable preferred stock.
The exchangeable preferreds are exchangeable for common shares at $8.44 each.
The investor group purchasing the shares, led by Gerald J. Ford, will receive warrants for 7.1 million shares, exercisable at $8.44 each for 15 months.
Subject to shareholder approval, the investors also will receive warrants for 4 million additional shares, exercisable under the same terms.
If the shareholders approve these additional warrants, the conversion price and warrant strike price will increase to $9.00 per share.
Upon conversion and exercise of the warrants, the investor group will own 20% of the company's then-outstanding common stock.
The offering is being conducted as part of the sale of the company's commercial real estate lending business, the sale of a minority interest in the company and the appointment of new senior management.
Following the private placement of the preferreds, Ford will become the company's chairman and will name two executives to senior positions within the company.
iStar Financial Inc. will purchase the company's real estate lending business and outstanding loan portfolio. For this, Fremont General will receive cash of about 30% of the net loan portfolio, or $1.9 billion, and a participation interest equal to about 70% of the net loan portfolio, which will bear interest at Libor plus 150 basis points.
Fremont, based in Santa Monica, Calif., is a commercial and residential real estate lending company.
| Issuer: | Fremont General Corp.
|
| Issue: | Exchangeable preferred stock
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| Amount: | $80 million
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| Conversion price: | $8.44 (may increase to $9.00 if shareholders approve additional warrants)
|
| Warrants: | For 7.1 million shares (may be increased by 4 million shares upon shareholder approval)
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| Warrant expiration: | 15 months
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| Warrant strike price: | $8.44 (may increase to $9.00 if shareholders approve additional warrants)
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| Investors: | Gerald J. Ford (lead)
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| Announcement date: | May 22
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| Stock symbol: | NYSE: FMT
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| Stock price: | $7.11 at close May 21
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