Investors Oppose Lomas Plan
A reorganization plan that Lomas Financial Corp. has presented after two years of bankruptcy protection is being opposed by some investors.
In settlement of all claims, Dallas-based Lomas Monday offered $360 million in cash plus notes with a face value of $840 million. But analysts expressed doubt that the notes would trade at or near face value.
"As an investor, there's no way I can endorse this plan," said Jay Lustig, an analyst at Drake Capital Securities Inc., Los Angeles.
"The Street will view the notes as subpar securities, and they will trade at a discount."
James Crowson, general counsel for Lomas Financial, said the issue of prospective trading values is "an investment banking question that is a matter of opinion." He offered no further comment.
Lomas must file a disclosure statement by Aug. 19 on its reorganization plan. Frank Anderson, a senior analyst at Stephens Inc., Little Rock, Ark., said Wall Street will be able to judge the Lomas plan better then.
Holding the nation's sixth-largest mortgage servicing portfolio in 1990, Lomas has steadily bought servicing portfolios all through its bankruptcy and plans to focus on that business.
Servicing Portfolio Burgeons
The servicing portfolio has ballooned to $30 billion, from $24 billion, since January.
Additionally, Lomas plans to sell computer support services to other mortgage-servicing companies.
The company earned $28.4 million in the first nine months of its fiscal year, which ended March 31. It lost $651.4 million in the year-earlier period.
As part of its reorganization, Lomas plans to deed 80% of its realty investment portfolio to equity holders. The company already has closed its nationwide loan origination network.