MNC Financial Inc., in a terse statement that did little to settle investors' nerves, said yesterday that it was still negotiating to extend a crucial loan agreement beyond last Friday's deadline.
Although the company would not elaborate, the announcement apparently meant that MNC's agreement Thursday to sell its equipment leasing division and four Colorado banks had not yet fully satisfied the conditions of the banking company's borrowings, analysts said.
MNC, traded on the New York Stock Exchange, fell to a new 52-week low on yesterday's news, which came before the market opened. The company, parent of Maryland National Bank and American Security Bank in Washington, closed at $3.375 a )) share, down 37.5 cents a share. It was the seventh-largest loser of the day on the exchange.
Under the original terms of a line of credit issued by Morgan Guaranty Trust Co. and other lenders, MNC had until Dec. 10 to raise $300 million or face the possibility of being required to repay immediately the $550 million it had already borrowed.
That deadline, which was extended to Friday, appeared to be met when MNC announced Thursday evening that it had agreed to sell its equipment leasing division to General Electric Capital Corp. and its four industrial banks in Colorado to Blazer Financial Corp. for $300 million.
But with yesterday's announcement that negotiations to extend the deadline were continuing, analysts were left attempting to piece together the little information that MNC has released on the matter.
"I think the problem is [the deal] hasn't closed," said David S. Penn, a banking analyst with Legg Mason Inc. "They announced it but it hasn't closed."
Further unnerving investors is that MNC must buy back $170 million of debt that comes due today. Without the security that the credit arrangement is in place and without knowing precisely how much cash the troubled banking company has at its disposal, analysts said they remained unclear what to expect.
"It doesn't do wonders for your nerves," said Johnston, Lemon & Co. analyst Elisabeth Albert Hayes.