Colonial BancGroup Inc., which on Tuesday reported its third straight quarterly loss, said it must raise $300 million in equity before receiving $553 million from the Treasury Department's capital purchase program.
Robert E. Lowder, Colonial's chairman, president, and chief executive, said in a press release that the company is in talks with several investors, including SunTx Capital Partners in Dallas, about selling a 24.9% stake in itself to raise the required funds.
The negotiations are pricing the stock at $1 to $1.50 a share with expectations of completing a transaction in the first quarter, he said. On Tuesday, the company's shares closed at $1.58 a share.
SunTx typically invests in manufacturing, services, and distribution companies, according the private equity firm's Web site. A call to SunTx was not immediately returned.
Colonial reported a fourth-quarter net loss of $825 million, or $4.11 cents a share, citing mounting credit costs and a noncash charge of $575 million to cover goodwill impairment. Analysts on average had expected a loss of 33 cents a share, according to Thomson Reuters.
The $26 billion-asset Montgomery, Ala., company lost $9 million in the second quarter and $71 million in the third quarter. Colonial earned $9 million in the fourth quarter of 2007. For full-year 2008 Colonial lost $880.5 million compared to earning $180.9 million in 2007.
Rising credit costs remain critical factor at Colonial. The company's fourth-quarter loan-loss provision rose 185% from the third quarter and 388% from a year earlier, to $455 million. Nonperforming assets fell 2.5% from the third quarter but rose 380% from a year earlier, to $661 million.