Moody's confirms Fremont

Moody's Investors Service said it confirmed Fremont General Corp.'s B3 senior debt rating, Fremont Investment and Loan's E+ bank financial strength rating, B1/Not Prime deposits and B2 issuer rating and Fremont General Financing I's Caa2 preferred stock rating.

This concludes the review for downgrade that began on March 5, and the outlook is stable following the announcement that Fremont has entered into a definitive agreement to sell its commercial real estate lending business to iStar Financial Inc.

For the sale of its loan portfolio, Fremont will receive about $1.9 billion in cash, representing 30% of the net portfolio, and a participation interest for the remaining 70% of the portfolio. In addition, Fremont announced the sale of a minority interest in the company, announced the appointment of a new senior management team and confirmed that Ellington Capital Management is the acquiring party in the previously disclosed letter of intent to sell its subprime residential real estate business.

The agency said that it believes these developments are positive, although there are still uncertainties regarding Fremont's future strategic direction, and that the actions are expected to improve Fremont's ability to make dividends from the bank to the holding company.

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