Scrambling to sell assets to pay upcoming bills, MNC Financial Inc. today announced it has a definitive agreement to ,, sell its Landmark Financial Services Inc. subsidiary for about $370 million.
The buyer is Baltimore-based Commercial Credit Co., a subsidiary of Primerica Corp. of New York.
The agreement comes a day after MNC, the parent company of Maryland National Bank, averted a default by repaying $170 million in notes with money from the sale of its leasing operation. The troubled Baltimore bank holding company also announced that it had renegotiated a crucial line of credit with a syndicate of banks.
The new agreement with the banks calls for MNC to repay a balance of $375 million on the line of credit on Jan. 14.
The sale of Landmark, which is expected to be completed early next month, will help MNC pay $921 million in debts that will be coming due during the next seven weeks.
The sale of Landmark will reduce MNC indebtedness by $37million because it includes liabilities taken over by Commercial Credit.
Both Commercial Credit and Landmark provide consumers with personal loans that are primarily fixed-rate, fixed-term loans secured by real estate.
Based in Silver Spring, Landmark has 116 offices in 10 states from Maryland to Florida. With a loan portfolio of about $355 million, the company has 470 workers, 75 of whom are based in Maryland.
MNC bought Landmark from Signet Banking Corp. in 1988 for $82 million.
At the end of November, Commercial Credit had 663 branches in 37 states nationwide and a portfolio of $5.1 billion. The Commercial Credit headquarters operation in Baltimore, at 300 St. Paul Place, has about 400 workers.
Primerica spokeswoman Mary McDermott said she expects the Landmark offices to be converted to Commercial Credit operations. Some offices may be consolidated, but she did not know how many.
Yesterday MNC repaid $175 million on the line of credit to the syndicate of banks headed by Morgan Guaranty Trust Co. That amount, in addition to the $170 million in notes, came from internal sources and the closing of the sale of MNC's leasing division to General Electric Capital Corp.
"It certainly is a positive development, but it certainly doesn't clear the decks as far as challenges," John A. Heffern, a bank analyst for Alex. Brown Inc., a Baltimore investment banking firm, said about the sale of the leasing division yesterday.
The sale of the leasing division reduced MNC's debt by $275 million.
The leasing subsidiary has about 70 employees, with about 60 based in Towson and 10 in offices across the country, according to MNC spokesman Daniel Finney.
Lisa Van Orden, a spokeswoman for GE Capital, said about half of the workers will be offered jobs. But she said it has not been decided whether they will have to move.
The division would become part of GE's Commercial Equipment Financing, which is based in Stamford, Conn., Van Orden said.
On Wall Street, the price of MNC stock was $3.75, up 25 cents in early afternoon trading today. Yesterday the stock gained 25 cents, closing at $3.62 1/2 a share.
The frantic financial maneuvering of the past few days is part of MNC's efforts to recover from bad real estate loans that were the primary cause of a $241.9 million loss in the first nine months of the year.
And there are more trials awaiting the troubled company.
Besides the $375 million that MNC has to repay Morgan, the bank holding company also is faced with paying another $546 million in notes that come due on Jan. 15 and Feb. 5, according to published reports.
MNC is trying to sell its profitable credit-card division, MBNA America.
If no buyer appears, the company is preparing to spin off MBNA as a publicly traded company. Such an initial stock offering could bring MNC as much as $1.13 billion.
It also is trying to sell off other subsidiaries such as LeaseFirst, the commercial division of MNC Credit Corp., and MNC Consumer Discount Co.