Groups affiliated with Gerald J. Ford and Robert M. Bass have agreed to put money into troubled SWS Group Inc. in Dallas.
Ford's Hilltop Holdings Inc., and Bass' Oak Hill Capital Partners are each lending SWS $50 million. The loans have a five-year term and an annual interest rate of 8%, and are prepayable after three years.
Hilltop and Oak Hill each will receive a warrant to allow them to buy nearly 8.7 million shares of SWS stock, at a price of $5.75 a share.
If exercised, the companies will collectively own 34% of SWS.
The excise price is below the $6.15 per share that SWS closed at on Friday.
That same day, SWS rejected an offer made on March 17 from Sterne Agee & Leach Inc. to buy the company at $6.25 a share. The day before that offer, SWS closed at $4.93 a share.
Ford is expected to join SWS' board; he is Hilltop's chairman and a former chairman and CEO of Golden State Bancorp Inc.
Bass was an investor in American Savings Bank in Stockton, Calif. Oak Hill's representative is expected to be its managing partner, J. Taylor Crandall.
SWS is the parent company of Southwest Securities FSB, which entered into a cease and desist order with the Office of Thrift Supervision on Feb. 4.
SWS said deterioration in the commercial real estate loan portfolio at its thrift led to increased credit costs and classified asset levels, and thus needed to raise capital.
The thrift posted a pretax loss of $5.8 million in the second quarter of fiscal 2011, which ended on Dec. 31, 2010.
Nonperforming assets fell to $103 million, from $127.1 million at the end of the first fiscal quarter, but up from $64.6 million at Dec. 31, 2009.
The loan-loss provision in the second quarter of fiscal 2011 was $6.7 million, compared with $39.5 million in the first quarter of fiscal 2011 and $4.7 million in the second quarter of fiscal 2010.
Net chargeoffs were $5.1 million in the fiscal 2011 second quarter, $29.3 million in the fiscal 2011 first quarter and $3.9 million in the fiscal 2010 second quarter.
Securities FSB had been one of the major warehouse providers but in the fourth quarter began to downsize its involvement.
