Capmark Financial Group Inc., a Horsham, Pa., commercial real estate finance company, has withdrawn its Federal Reserve Board application to become a bank holding company and is in talks with lenders to restructure its revolving credit and bridge loan agreements to avoid default.
On Wednesday, Capmark reported a preliminary pretax loss of $800 million in the fourth quarter. The company said it is still reviewing certain assets "for recoverability or impairment," so the final tally of its losses could be higher. A bigger loss could cause Capmark's leverage ratio to exceed the maximum permitted under its loan agreements, putting the company in default, it said.
Capmark said in a securities filing that it had borrowed substantially all of the $2.5 billion available under its revolving credit line. It had roughly $1.4 billion in cash available on Tuesday.
The company and its industrial loan bank, the $8.6 billion-asset Capmark Bank in Midvale, Utah, applied for money through the Treasury's Capital Purchase Program, but the company said last month it was not eligible under current rules. Capmark said its board instructed management to withdraw the bank holding company application "after evaluating the financial and other requirements" set by the Fed. Capmark, formerly known as GMAC Commercial Holding Corp., was a unit of General Motors Corp. until 2006, when a group of private equity firms acquired a majority stake in the lender and renamed it.