NovaStar Says in Deal to Raise $150 Million in Equity

NovaStar Financial Inc. said late Monday that it concluded its review of “strategic alternatives” with a deal designed to generate $150 million of equity. Related Links NovaStar's Press ReleaseThe private-equity arms of Massachusetts Mutual Life Insurance Co. and Jefferies Group Inc. bought $52.5 million of convertible preferred shares of the subprime mortgage lender Monday for a 7% discount, or $48.8 million.

The Kansas City, Mo., company will offer another $101.2 million of convertible preferred stock at par to its current shareholders. MassMutual and Jefferies agreed to buy any of these securities not bought by other shareholders, and each company will get the right to nominate one director to an expanded NovaStar board.

NovaStar announced in April that it was evaluating its options, including a possible sale.