LOS ANGELES - Aames Financial Corp. said on Thursday that it has received the first phase of a $50 million equity investment from Capital Z Partners, its largest institutional shareholder.

The subprime home equity lender got $34.7 million in exchange for 40.8 million shares of Series C convertible preferred stock and warrants to buy five million more shares at the same price of 85 cents. The second phase of the investment will provide Capital Z an additional 18 million shares. The New York investment firm now owns more than 80% of Aames.

"This equity infusion is a key driver in Aames' turnaround strategy," said A. Jay Meyerson, its chief executive officer. It "firmly positions Aames to execute its business plan of enhancing the value of its loan production while growing at its core origination channels and reducing costs."

The transaction comes on the heels of a disastrous third quarter, which ended March 31: Aames posted a $61.5 million loss. It has lost more than $350 million over the last six quarters.

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