Contifinancial Corp. said that its banks have extended until March 2000 what had been an Aug. 20 deadline for repayment of $422 million of debt.

The troubled New York-based specialty lender lost $660 million in the past two quarters and has agreed to provide its lenders, led by Credit Suisse First Boston and Dresdner Bank, with $147 million in collateral in exchange for the extension.

Reilly E. Tierney, an analyst at Fox-Pitt, Kelton, said Conti's future hinges on its new management team. Succeeding James Moore as chief executive is Alan Fishman, a former chief financial officer of Chemical Bank.

"Alan Fishman has a lot of relationships in the banking community, and he's trying to do the right thing," Mr. Tierney said. "I think the bankers are giving him a reprieve. They are saying, 'Let's see what you can do in the next six months.'"

Contifinancial has a negative net worth, and if its lenders had forced it into default they would not have gotten their money back. With the extension, Conti's lenders have to navigate the company through the fourth quarter and the year-2000 complications the quarter will bring.

"There was a lot of bad blood between the banks and the former Conti management, but I think at this point the company is being run for the debtholders and not to try and improve the position of the equity holders," Mr. Tierney said. "It's unlikely that Conti will default before their six months are up. Default is a strategy you use when you want to put someone in their place, and that's not what is going on here."

Some analysts said another motivation for the debt extension might be tied to a $95 million payment that Conti made to its lenders in June after the $125 million sale of its subprime auto lending business. If banks had forced Conti into default, the company's senior noteholders would have the right to argue that the payment was preferential and demand that it be returned to the estate and divided.

Contifinancial's shares closed Friday at $2, up from $1.75.

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