MNC Financial Inc. said yesterday that it has received an extra four days to meet "certain requirements" set by its lenders, but the troubled banking company missed a crucial deadline in its plan to regain financial health.
The company, parent of Maryland National Bank and American Security Bank in Washington, said a group of banks led by Morgan Guaranty Trust Co. gave it until Friday to fulfill the terms of a vital $750 million credit agreement.
The news of the delay sent MNC's stock reeling yesterday. The Baltimore-based company was the third-biggest percentage loser for the day on the New York Stock Exchange, falling 87.5 cents, or 17 percent, to $4.25 a share.
MNC declined to identify which terms of the lending agreement had not been met by yesterday's deadline, but one requirement was that the financially troubled company raise $300 million or face the possibility of being required to repay immediately the $550 million it has already borrowed.
MNC has said previously that it planned to raise the additional funds through the sale of a number of subsidiaries, including its prized credit card division. By yesterday, however, the company had yet to announce the completion of any of its planned asset sales.
MNC also said it was "in discussions" with the Morgan Guaranty lending group to reach a definitive agreement regarding the 4-day extension.
Elisabeth Albert Hayes, a banking analyst with Johnston, Lemon & Co. in Washington, said the market's reaction came as investors were again reminded of the deadline and the fact that MNC had yet to complete any of its asset sales.
She said investors were further unnerved by the dearth of information MNC has provided about the planned sales.
"We're playing poker out there, and we don't know what the chips are," Ms. Hayes said. "But there are obviously still chips on the table or there's no reason for the delay to Friday."