Bouncing back smartly from a period of financial difficulty, Aames Financial Corp. has set forth an ambitious financing plan that calls for a program of quarterly securitizations and whole loan sales.
Mani Sadeghi, chief executive officer of Aames, said he expects the subprime home equity lender will be in the market with between $700 million and $800 million of paper each quarter, equally split between whole loan sales and securitizations.
He said the company is presently working with Lehman Brothers on an asset-backed sale for this quarter, for $300 million to $400 million.
Sadeghi noted that Aames already has commitments for $1.5 billion in new loan production, so he foresees ample supply to maintain the ambitious securitization program.
In moving forward, Aames is also receiving a strong boost from a major investment supplied by Capital Z, a New York-based private equity fund. Capital Z made an initial $76.5 million investment in Aames in December 1998. In the past week, Capital Z has agreed to invest an additional $25 million and renewed its underwriting commitment for up to $25 million of a $31 million rights offering that is expected to take place in September.
An official for Aames said the Capital Z investments in effect would result in its takeover of the home equity lender. However, Capital Z will maintain a level of public ownership in the company and has in fact committed to build long-term shareholder values.
The company said there is no intention to change the company's identity, which has as a very strong franchise, especially in California.
Aames' problems began when it embarked upon an overly ambitious expansion plan that is now being corrected. With the capital infusion from Capital Z as well as cost-cutting efforts, including the shutting down of unprofitable business lines, the company's turnaround is underway.
Sadeghi is also a partner in Capital Z, but stepped into the operating post after Cary H. Thompson who held the CEO position since April 1997, resigned earlier this month to become a senior managing director and head of corporate finance at Bear, Stearns & Co.'s Los Angeles office. - David Feldheim