United Community Banks Inc. entered an agreement to sell $100 million of nonperforming loans to an asset manager in order to rid illiquid assets and create new capital as the bank continues to suffer from credit crunch.

The Georgia-based bank, with total assets of $8 billion, will sell some of its assets including certain nonperforming commercial and residential mortgage loans and other real estate properties to Fletcher International at book value without discount.

"This transaction helps to significantly reduce our non-performing assets by about 25%, allowing us to achieve our goal of reducing non-performing assets at the highest economic value," said President and Chief Executive Jimmy Tallent.

Fletcher will deposit $10 million in the bank by April 30 and pay $10 million in cash. Uniited Community then will lend $80 million to Fletcher to fund the balance of the purchase. At that time, it will also pay $17.5 million to cover the interest and other carry costs for about three years.

In return, Fletcher will receive warrants to buy up to $30 million of United Community stock of the bank at the price of $4.25 a share. That 7.1 million shares compares with the 94 million currently outstanding.

Georgia banks have been among the hardest hit during the recession and bursting of the housing bubble, with dozens seized by federal regulators as loan losses soared and cpital levels became depleted.

United Community shares closed at $4.41 on Wednesday and didn't trade premarket. The stock has risen 30% this year.

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