A New York private equity firm has agreed to invest $250 million in Flagstar Bancorp Inc., gaining 70% ownership of the Troy, Mich., thrift company. But the deal's completion hinges on Flagstar receiving an additional $250 million from the Treasury Department's Troubled Asset Relief Program.

The $14.2 billion-asset Flagstar disclosed on Oct. 31 that it had applied for the Treasury funds.

Flagstar announced the deal with a MatlinPatterson Global Advisors LLC late Tuesday, a day after warning that its stock was in danger of being delisted from the New York Stock Exchange because it had been trading below $1 for at least 30 consecutive days.

Through an affiliated fund, MatlinPatterson would acquire 312.5 million Flagstar shares at 80 cents each, a 33% premium over Flagstar's closing price Wednesday. The agreement also calls for Flagstar chairman Thomas Hammond and vice chairman, president, and chief executive Mark Hammond to invest $2 million each in the company. Other senior executives may also invest up to $1 million, Flagstar said.

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