Mercury Finance Co. said Wednesday that it closed the sale of its Lyndon Insurance Group subsidiary to Frontier Insurance Group for $92 million in cash.
Mercury, the troubled subprime auto lender, will record a net loss of $25 million on the transaction, as previously reported. The company acquired Lyndon for $72.5 million in 1995 and merged its other insurance operations with it.
Meanwhile, Mercury's $50 million loan from Bank of America comes due June 20, raising concerns that the troubled company may need to come up with alternative funding to pay operating costs.
But according to one trader, Mercury's creditors are not going to pull the plug. "Everyone's on board," he said.
Holders of Mercury's debt are getting a paydown - an amount short of full repayment - the trader said. Details of the paydown are not public.
The draft of a new audit and restatement of Mercury's earnings is reportedly at the Securities and Exchange Commission.