The largest institutional shareholder of BNC Mortgage of Irvine, Calif., has offered $55.4 million to buy the company, topping a management-led offer of just over $50 million, made Feb. 4.

Greenlight Capital of New York, which owns 665,400 shares, or 13.2% of the company, offered to purchase all outstanding shares for $11 each. BNC management offered $10 a share.

In a letter attached as an exhibit to Friday's amended Securities and Exchange Commission filing announcing its offer, Greenlight Capital criticized management's offer and questioned a provision to pay a "large breakup fee and expense reimbursement" to the management-led group.

Greenlight, which is led by managing member Jeffrey Keswin, contended in the letter that its proposal "is in the best interests of BNC and its stockholders."

In an interview Tuesday, Greenlight co-president David Einhorn said, "We believe that their [management's] offer is inadequate to BNC shareholders."

At the time of the management-backed proposal, several analysts said that the company - whose stock price had been hovering between $6 and $7 - could be worth almost $15 a share, or $85 million. They cited cash holdings of $30 million and earnings of more than a $1 million in four of the last five quarters, through Dec. 31.

Mike Crawford, an analyst with B. Riley & Co., said one reason management made its offer - which at the time he called low - was to encourage other bids. "I think it's in play, and now Greenlight has made a larger offer," he said.

Mr. Crawford called Greenlight's offer "serious" but said it would be worth only $10.61 a share if breakup fees were subtracted.

Greenlight, which maintains that it could make the deal without financing, requested an answer by the close of business Tuesday of this week.

In a release Tuesday, BNC said it had received Greenlight's proposal and that a special committee planned to review it and give the board its recommendation.

Both BNC and Greenlight declined to comment on the status of the offer Wednesday.

Mr. Einhorn said it was hard for him to speculate on what BNC might do, "but I know what I'm going to do." When asked what that might be, he responded, "Hopefully, buy the company for $11 a share."

Shares of BNC, which traded around $7 the day before the announcement of the management-led proposal, jumped to $9 in the following days. On Feb. 18, the stock reached an 18-month high of $9.5625. It was trading at $9.75 early Wednesday.

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