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Popular Inc. in San Juan, P.R., said this week that a previously announced plan to sell off roughly $375 million of troubled construction and commercial real estate loans to an investment group has been called off after the two sides could not agree on the terms of the deal.
May 20
Banco Popular de Puerto Rico in San Juan has completed a deal to sell roughly $358 million of mostly nonperforming commercial real estate and construction loans to a joint venture created by Goldman Sachs & Co., Caribbean Property Group LLC and East Rock Capital LLC.
The bank's parent company, the $38 billion-asset Popular Inc., said late Thursday that the joint venture has agreed to pay about 45 cents on the dollar on the loans' unpaid principal balance as of March 31. Because the loans were sold at a price essentially equal to their book value, Popular will not recognize a gain or loss on the sale.
"This transaction is an important step; one of several initiatives the Corporation is pursuing to continue to derisk its balance sheet,” Richard Carrión, Popular's chairman and chief executive, said in a news release.
The company said that 97% of the loans are no longer performing.
Popular had announced in January that it was selling $375 million of problem loans to unnamed joint venture, but that deal was
Under the agreement announced Thursday, Popular said that it would receive $48 million in cash, a note for $86 million as seller financing and a 24.9% equity stake in the new joint venture. Banco Popular also will extend a $68.5 million loan to the joint Venture to cover unfunded commitments and other costs to complete the construction projects, and a $20 million working capital line of credit to fund certain expenses of the joint venture.
Popular's shares were trading at $1.58 late Friday morning, up 2.6% from Thursday's close. The shares have lost about half their value since the start of the year.
