Delta Financial recently completed its $150 million debt swap transaction, which is part of the balance-sheet restructuring the company has been implementing for the past year.

Officials at Delta previously told ASR that had this transaction fallen through, the company would not have been able to continue as a "going concern".

Delta essentially packaged mortgage-related assets, mostly residual interests in its past securitizations, valued at more than $150 million, into a new special purpose corporation, which issued preferred equity shares and voting rights to the former debt holders. In the end, Delta was able to successfully extinguish $138 million of 9.5% senior secured debt, and $1.1 million of 9.5% senior notes, both due in 2004.

As a result, the company was able to make its August interest payment on the remaining $10.8 million of outstanding debt, according to an 8-K filing with the Securities & Exchange Commission. Interestingly, the company closed on its debt swap deal just one day before the payment would have gone into default on the approximate $139.2 million worth of bonds it extinguished.

Both Fitch and Moody's Investors Service will withdraw corporate debt ratings on Delta. In May, Delta completed the transfer of its mortgage servicing portfolio to Ocwen Financial.

Meanwhile, Delta will be tapping the ABS market within the next couple of weeks with a $150 million to $200 million deal, via underwriter Greenwich Capital Markets.

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