FirstCity In New Investment Deal With Varde, Inks Loan Pact

30th Jun 2010 13:03

DOW JONES NEWSWIRES FirstCity Financial Corp. (FCFC) announced it has refinanced credit lines and reached a deal to team up with fellow distressed-asset investor Varde Investment Partners LP. The duo have worked together before, last month buying $207 million of assets from and a 9.9% stake in Intervest Bancshares Corp. (IBCA). At the time, FirstCity President and Chief Executive James Sartain said the purchase was part of his financial-services company's long-term strategy of buying distressed portfolios and it would consider similar purchases from other banks. He noted FirstCity and Varde, which has more than $6 billion of assets under management, anticipated undertaking deals similar to the Intervest one. The agreement announced Wednesday calls for Varde being able to invest up to $750 million, at its discretion, alongside FirstCity in distressed loan portfolios and similar investment opportunities. FirstCity will invest between 5% and 25% in each deal, receive a $200,000 monthly retainer and act as the porfolios' exclusive servicer. In addition, Varde has agreed to buy 150,000 FirstCity shares at $5.93 each, 3 cents higher than Tuesday's closing price. Shares were inactive premarket, and the stock would give Varde a 1.5% stake in the company. Meanwhile, FirstCity said it has closed on a 3-year, $268.6 million financing deal with Royal Bank of Scotland Group PLC (RBS.LN, RBS) that allows for repayment over time as cash flows from the underlying assets securing the loan facility are realized. -By Kevin Kingsbury; Dow Jones Newswires; 212-416-2354; [email protected] (END) Dow Jones Newswires June 30, 2010 08:03 ET (12:03 GMT)