In its efforts to shore up its capital position, MNC Financial Inc. in the last few days has sold or made agreements to sell $670 million worth of assets. The troubled Baltimore bank-holding company hopes to sell four more subsidiaries in the coming weeks.
The assets are being sold to meet looming debt obligations of $921 million, which are coming due in the next seven weeks.
The latest sale came yesterday when MNC, the parent of Maryland National Bank, announced that 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.
On Monday, MNC closed the sale of its Leasing Division of MNC Credit Corp. to General Electric Capital Corp., reducing MNC's debt by $275 million.
The company also announced last week that it sold four industrial banks in Colorado to Blazer Financial Corp., a subsidiary of Great Western Financial Corp. to reduce its debt another $25 million.
Industrial banks are small state-chartered banks unique to Colorado that take deposits and make consumer loans, according to MNC spokesman Daniel Finney.
Still on the block are the following divisions:
* MBNA America, the bank's profitable credit-card division. If MNC does not get a buyer for MBNA, the company is preparing to spin off the unit as a publicly traded company. Such an initial stock offering could bring MNC as much as $1.13 billion, using initial estimates of the stock's price.
* LeaseFirst, a company that buys equipment, such as computers, that are then leased through retail outlets to consumers and businesses. Based in Southfield, Mich., it has 21 offices in 14 states.
* The Commercial Division of MNC Credit Corp., which makes commercial loans to mid-size companies. It is based in Towson and has eight offices in eight states.
* MNC Consumer Discount Co., which makes unsecured consumer loans by mail to members of affinity groups, such as professional or trade groups. It has one office in Pittsburgh.
Finney declined to give employment figures for the different divisions.
While the likely price of the credit-card division is generally known, the total that MNC may receive for the other three divisions is uncertain.
The three subsidiaries have total assets of about $800 million, Finney said. Add in a few other scattered assets that are up for sale and the total grows to about $1 billion, he said.
But assets are not necessarily an indication of what a subsidiary will bring. Other factors, such as earnings, are important in setting a price. But this is information that MNC is not releasing.
"We are in an information vacuum," said John A. Bailey, a banking analyst with Baker, Ferris Watts Inc., a Washington-based stock brokerage firm. He said his uninformed guess would be that the subsidiaries should sell for about 40 percent of the total assets, which would be about $400 million.
However, Bailey concedes that his estimate for Landmark was too low and he is glad it was. He said it was good news that a subsidiary was sold and it was better news that MNC got a good price for it. "I thought that was great," he said.
The sale also gives MNC a "high hand" if the company needs to negotiate for another line of credit to tide it over while it sells the assets, Bailey said.
The Landmark sale agreement came a day after MNC averted a default by repaying $170 million in notes with money from the sale of its leasing operation. MNC 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 reduce MNC indebtedness by $374 million 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.
On the block
To raise cash, MNC Financial Inc. has sold or reached agreements to sell three of its subsidiaries. Four more units are still for sale.
* Landmark Financial Services Inc.
* The Leasing Division of MNC Credit Corp.
* A group of four industrial banks in Colorado
* MBNA America credit-card division
* The Commercial Division of MNC Credit Corp.
* MNC Consumer Discount Co.