Lone Star responds to Accredited Home Lenders' claims in court

By Lisa Kerner

Charlotte, N.C., Aug. 20 - LSF5 Accredited Investments, LLC, a subsidiary of Lone Star Fund V (U.S.), LP, filed an answer and counterclaims in response to a complaint filed in Delaware on Aug. 13 by Accredited Home Lenders Holding Co.

Accredited Home Lenders filed a lawsuit against Lone Star and two of its affiliates obligating Lone Star to close its tender offer for Accredited Home Lenders and complete the merger of the two companies as planned.

Lone Star, in an earlier Securities and Exchange Commission filing, alleged that Accredited Home Lenders would not satisfy the conditions to the closing of the tender offer. Lone Star blamed its allegation on the "drastic deterioration in the financial and operational condition" of Accredited Home Lenders.

Lone Star "categorically denies" Accredited Home Lenders' claim that the company is in breach of its obligations under the companies' merger agreement. In addition, Lone Star claims that Accredited Home Lenders would never be entitled to an injunction enforcing the merger agreement because its only contractual remedy is a reverse break-up fee of $12 million.

Lone Star wants the court to declare that Accredited Home Lenders has not met the conditions to closing the current tender offer and it has "materially breached numerous other obligations to Lone Star." As a result, Lone Star said it is entitled to terminate the deal.

It was previously reported that Lone Star extended its tender offer for Accredited Home Lenders to midnight ET on Aug. 28 after only 43% of the company's stock was tendered by the original deadline of Aug. 14.

Accredited Home Lenders' board of directors continued to urge shareholders to tender their shares. At one time, the offer was slated to end on July 16 but was extended to July 31 and later to Aug. 14.

The companies entered into a merger agreement on June 4 in which Lone Star agreed to acquire Accredited Home Lenders for $15.10 per share in an all-cash transaction valued at $400 million.

Under the companies' merger agreement, changes generally affecting the non-prime industry do not provide a basis for Lone Star to bail out of the deal, Accredited Home Lenders said in a company news release.

Accredited Home Lenders is a San Diego mortgage company.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.