Another subprime auto lender is experiencing a serious financial crisis.
First Enterprise Financial Group Inc. said Wednesday it will report a fourth-quarter loss "the extent of which cannot be determined at this time." Trading of First Enterprise's shares on the Nasdaq stock market was suspended shortly before the announcement.
The company said it "is experiencing problems in meeting its funding needs" and has temporarily suspended buying new contracts from car dealers who make loans to consumers with bad credit because is at the limit of its borrowing capacity.
The company, which was started in the early 1990s by former employees of Mercury Finance Co. and its parent, First Illinois Finance Co., plans to close 19 of its 47 branches and absorb a one-time charge of $125,000. Approximately 60 employees are expected to be affected by the actions, the company said in a release, although management is "expected to remain substantially intact."
The company said it is engaged in discussions to obtain additional financing to supplement normal cash flows and is exploring "other strategic alternatives." First Enterprise chairman and chief executive Mitchell Harrington, who underwent heart bypass surgery last week, is expected to return to work this month, the company has said. -