Mego Mortgage Corp. said it would recapitalize with a $40 million to $60 million private placement of equity securities at a price between $1.50 to $2.
The company said it has curtailed loan originations due to "pressing cash requirements." It is also proposing to exchange new subordinated notes and convertible preferred stock for its $80 million of 12.5% senior subordinated notes that are due in 2001.
Mego said it would use proceeds to fund loans and for general corporate purposes. The company is among the specialty firms that have taken writedowns because of loans prepaying faster than expected.
Consummation of the private placement is expected to be contingent upon holders of most of the outstanding notes accepting the exchange offer.