Affiliated Computer, Loser in RTC Bidding, Cries Foul
The sale of the largest mortgage company under government control has erupted into a legal brawl, with the runner-up bidder claiming the decks were stacked.
In a lawsuit filed this week in U.S. District Court in Dallas, Affiliated Computer Systems said the Resolution Trust Corp. unfairly favored an investor group led by the senior managers of BancPlus Mortgage Corp., the company that was sold.
An official of the RTC claimed that Affiliated, based in Dallas, did not have the funding in place to back its purchase plan.
The winning bid, backed by Texas billionaires Sid and Lee Bass, was selected in late August. The group is believed to have bid more than $100 million for the servicing operation, BancPlus' primary business. It also is said to be acquiring other assets and assuming debt.
Affiliated, a data-processing concern that wants to enter mortgage banking, is demanding that the deal be stopped. The RTC has agreed to delay the closing pending review next week by the court.
BancPlus Mortgage, a unit of the failed BancPlus Federal Savings Association in San Antonio, services about $10 billion of loans. It ranks as the nation's 24th largest servicer.
|Essential Information' Issue
Affiliated charged in the suit that it was denied "essential information" known to the management team. As the bidding progressed, the suit said, the agency "imposed terms and conditions that increased the management group's inherent advantage."
In an interview this week, Darwin Deason, chairman of Affiliated, accused the RTC of getting by "with playing judge, jury, executioner, and defendant. We happen to be someone who's either stupid enough or has nerve enough to call their hand on it," he said.
Edward Mahaney, who coordinates the sale of mortgage-banking assets for the RTC, denied the charges. The agency has been "extrasensitive to the needs" of bidders other than the management team, he said in an interview.
Deepest Pockets in Question
He said one reason BancPlus management won was that it "had equity and funding in place and could close within 30 to 45 days. The computer company, which on paper had a higher bid, had no equity or funding in place."
Mr. Deason branded Mr. Mahaney's comment "outrageously wrong." He said his group had lined up financing from Goldman, Sachs & Co., a firm that "compares favorably with Sid Bass. I believe they may have even deeper pockets than Sid Bass."
Suit Described as |Musings'
Laurence Platt, an attorney for the management group, dismissed the suit as "the musings of a disgruntled loser."
This is not the first time Mr. Deason has taken on a powerful foe. Earlier this year, his company filed an antitrust complaint with the Justice Department against International Business Machines Corp.
In the suit, Affiliated said: "The RTC's only excuse for its otherwise inexplicable actions" in favoring the BancPlus management group during negotiations was its concern that they might resign, "materially and adversely affecting the value of BancPlus."
Mr. Mahaney replied: "That was never an issue, from the RTC's perspective."