Alfred Lerner, chairman and chief executive of MNC Financial Inc., told federal regulators yesterday that he might use a fresh $75 million loan commitment to shop the open market and boost his stake in the Baltimore banking company to more than 25 percent.
Mr. Lerner, already MNC's largest shareholder with an 8.8 percent stake, said in a filing with the Securities and Exchange Commission that his proposed goal of gaining effective control of the company remained intact despite the termination of a previous plan to buy up to $180 million worth of MNC preferred stock.
That plan, part of a proposed capital infusion announced in early August, would have given the newly appointed chairman as much as 23.8 percent of the company.
Mr. Lerner, who was traveling yesterday, said in a telephone interview that he has no firm plans to increase his stake in MNC and that the filing was made to keep his options open. He also said in the SEC filing that he had not changed his stake in the company during the past 60 days. "I just wanted to have the ability to make a proper investment judgment at the appropriate time," he said. "It really isn't much more than that."
The proposed issuance of the MNC preferred shares was terminated three weeks ago after the company decided to sell its credit card division, MBNA American Bank N.A., to raise the much-needed capital.
The preferred-stock deal, which promised an annual dividend equal to 12 percent of the stock price, was canceled because the company was "able to obtain financing on terms materially more favorable to the company than the terms under the [preferred-stock] agreement," according to a copy of the termination notice.
Mr. Lerner said in the SEC filing, however, that he might use a $75 million loan commitment that he received in connection with the previous preferred-stock deal to acquire additional MNC common shares on the open market.
If an application to increase his stake to at least 25.1 percent is approved by the Federal Reserve Board, the federal agency that regulates bank holding companies, Mr. Lerner would be free to purchase additional shares without further regulatory approval.