For the third time in a year, AmBase Corp. has announced plans to sell its troubled Carteret Savings Bank unit to well-capitalized investors.
AmBase said on Monday that it has arranged a $200 million capital infusion from The Carlyle Group, a Washington-based merchant banking company, and Colonial Capital Inc., a real estate and financial services management and acquisition firm based in Los Angeles.
AmBase Would Add Capital
The new investors would own 80% of Carteret, which is New Jersey's largest thrift.
AmBase, a New York-based firm controlled by several former investment bankers from Dillon Read, said it plans to add an unspecified amount of fresh capital to bring Carteret's capital to regulatory requirements.
If the deal materializes, Carteret would become the largest thrift to be rescued without tax-payer funds since the 1989 thrift bailout law took effect.
Based in Morristown, N.J., Carteret has $5 billion in assets.
But the deal is conditional on a detailed review of Carteret's books and records by the investment group.
Due diligence has derailed two prior recapitalization attempts -- including one highly publicized plan by Kohlberg & Co. to buy 90% of Carteret.
Officials Optimistic
AmBase officials said they are optimistic about the latest plan.
"We have long believed that the fundamentals of the institution... would permit us to attract private capital on commercially acceptable terms," said Richard A. Bianco, who is chief executive of AmBase and chairman and chief executive of Carteret.
The thrift, he asserted, has strong franchises in consumer banking, mortgage banking, and insurance premium finance.
The Carlyle Group, the moving force behind the Carteret deal, is best known in banking circles as the adviser to Waleed bin Talel, the Saudi prince who owns a 10% stake in Citicorp.
Its principals include former Secretary of Defense Frank Carlucci; Fred Malek, a key adviser to President Bush's reelection campaign, and several former Marriott Corp. executives.
Hole Getting Deeper
Carteret has been out of compliance with all three federal capital requirements since the second quarter of 1991, when it reported a $ 149 million loss in a bid to clear the decks of bad loans.
It had a smaller loss the following quarter, and has eked out small profits since then.
But Carteret's capital hole has deepened. It currently has deficits of $65 million in tangible capital $13 malign in core capital, and $14 million in risk-based capital.
AmBase has aggressively sought acquirers for the thrift for almost two years. Its efforts appeared rewarded in July when the Kohlberg initiative was announced. But the investment boutique backed out in August after completing due diligence.
"That was just very debilitating," said an AmBase official.
The depression was compounded because AmBase had suffered a similar setback in February when the closely held American Stock Transfer Co. dropped plans to buy Carteret.
After a cursory review, the firm said it concluded that the thrift did not fit into its business strategy.
