BancTrust Financial Group (BTFG), a troubled Mobile, Ala., company that is looking for a buyer, is delaying its interest payments on a $20 million loan outstanding to the Federal Deposit Insurance Corp.
The $2 billion asset company said Thursday that, under the reworked terms of the loan agreement, it does not have to make interest payments until the credit matures in April 2013, in exchange for agreeing to a higher interest rate and fixed payments. It will also have to pay all interest accrued plus a fee upon the maturity date and set up an escrow account to cover future payments.
BancTrust, which recently reported a $50 million loss in the fourth quarter, has already delayed payments on its two other big liabilities: interest on $34 million in trust-preferred securities and dividends on roughly $50 million in preferred shares outstanding to the U.S. Treasury through the Troubled Asset Relief Program.
BancTrust said on March 21 that it was in discussions to modify terms of the FDIC loan in announcing that it would sell itself after plans to raise capital from private equity failed to materialize.
The debt to the FDIC stems from a loan BancTrust received in 2007 Silverton Bank, an Atlanta-based bankers' bank that failed in 2009. The FDIC inherited the loan when it took receivership of Silverton.