WOODBURY, N.Y. - Beleaguered subprime lender Delta Financial Corp. announced on Thursday a 17% across-the-board workforce reduction and a decrease in the salaries of senior management and other personnel.
It also announced a debt restructuring agreement concerning its outstanding $150 million of bonds.
Citing economic conditions that have affected "the entire mortgage industry," Hugh Miller, president and chief executive of Delta, said the changes will lower expenses and improve profitability."While we are saddened by the need to lay off dedicated employees, it was necessary given the current environment in which Delta operates," Mr. Miller said.
The debt restructuring allows Delta to obtain financing secured by some of its residual assets. In return for the consent of a majority of the noteholders, Delta agreed to offer current holders the option of exchanging their securities for new senior notes, which will be secured by $165 million of residual assets and 10-year warrants to buy 1.6 million shares at $9.10 a share.
Delta said the agreement will provide immediate access to cash flows that would otherwise not be available to it.