ContiFinancial looks to be at the end of an ever shortening rope as it announced last week that its proposed merger with GMAC's mortgage unit Residential Funding Corp. was cancelled.
Market watchers had predicted the demise of the deal soon after ContiFinancial in May floated a press release announcing acquisition talks between both companies.
Analysts thought the timing was dubious, as the New York-based home equity issuer received a corporate downgrade from Moody's Investors Service and Standard & Poor's Ratings Group the day after the statement was issued.
Most companies are notified by the rating's agencies the day before they receive a downgrade.
Sources speculated that ContiFinancial asked RFC to affirm the announcement regardless of the degree of seriousness the talks held. Conti officials would not return phone calls on the matter.
The company's stock hovered just above $1 at press time. - SK