Troubled subprime auto lender Mercury Finance Co. announced a plan Thursday to defend against unwanted takeover attempts.
The plan is "designed to protect Mercury's shareholders from abusive takeover tactics," the company said in a press release. Mercury, which has been in turmoil since disclosing Jan. 29 that it had overstated four years' earnings because of accounting irregularities, said it knows of no effort to acquire control.
The takeover defense enables shareholders to purchase stock for $13.50 per share if any person or group buys 15% of the company's stock or begins a tender offer that could result in a 50% ownership.
Separately, subprime auto lender Jayhawk Acceptance Corp., which filed for bankruptcy Feb. 6, announced the resignation of Richard B. Hoffman, president and chief operating officer, after 13 months on the job. No successor was named.
Jayhawk also announced that a judge authorized continued use of its primary lender's cash collateral through March 31 to continue operations.
Mercury shares continue to be among the most heavily traded on the New York Stock Exchange. More than 36 million shares have changed hands since Monday. The price continues to rise, reaching $3.375 per share in late trading on Thursday, up 50 cents since the opening bell on Monday.
Traders attribute the strong volume and price to confidence that the company will not be forced to file for bankruptcy. Mercury reportedly held a conference call on Monday with creditors, with positive results.
"Everyone's on board, and everyone's playing," said one trader. "No one's going to threaten to accelerate (debt due dates). It's a real viable business now that the creditor problem is done with."
- Heather Timmons and Aaron Elstein