Ford Reneges on Fremont Deal

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Shares in Fremont General Corp. plummeted nearly 20 percent Wednesday after billionaire banker Gerald Ford reneged on a rescue plan for the troubled lender announced earlier this year.


The Texas-based banker and former chief executive of Golden State Bancorp told the Santa Monica-based lender that he was “not prepared to consummate” the $80 million investment under terms the sides agreed to back in May, Fremont said in a statement Wednesday.


Fremont said it does “not necessarily agree with the factual positions” taken by Ford and is in talks with him about revising the terms. Fremont also said it can offer “no assurances” that a new deal will be reached.


The initial agreement between Fremont and Ford came after Fremont exited the residential lending business following an order from the Federal Deposit Insurance Corp. in March that mandated the company stop making home loans to unqualified borrowers.


Shares in Fremont soared after the agreement was announced in May, fueled by rumors that Ford was going to take the helm of the company. Fremont fanned the rumors when it later sold its commercial lending business to iStar Financial Inc. for $1.9 billion in a move to pay debt and to focus on expanding its retail banking business with 22 branches in the state.


Shares in Fremont tumbled 19.7 percent, or $1.01, to $4.12 in afternoon trading Wednesday on the New York Stock Exchange. Shares have lost 69 percent since the deal with Ford was announced at the end of May.

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