Following a flirtation with Residential Funding Corp. that proved fruitless, ContiFinancial announced last week that it has embarked on a new search for a buyer, and has placed all securitization plans on hold, at least until additional equity can be found.
Last week the company said it had enlisted both Lehman Brothers and The Blackstone Group to help explore options that might get the ailing home-equity issuer back on its feet.
In a statement, the company said that in addition to finding a buyer, other strategic alternatives were being persued, including a recapitalization of the company from an equity infusion. Continental Grain Co. owns a 78% stake in ContiFinancial, but has thus far made no effort to resolve its financial troubles.
Merger discussions with RFC were rumored to be less-than-serious, according to a source close to the situation, who believed the company's goal of circulating its announcement was aimed at deflecting bad publicity following a corporate downgrade from Moody's Investors Service and Standard & Poor's Ratings Group. Those discussions were "terminated" according to a July 14 press release from Conti. The company would not comment on the rumor; neither would RFC.
Greenwich Capital Markets Inc. agreed in August to give ContiFinancial a $1.5 billion credit line until March 2000, and underwrite the securitization of $850 million of home equity loans.
The deal has yet to make itself known in the market, and Frank Baier, new chief financial officer at ContiFinancial, said securitization ranks second to finding a buyer for the company.