H&R Block's (NYSE: HRB) sale of its subprime lending unit to Cerberus Capital Management is in trouble, according to a Reuters report in The New York Times.
In the original deal, announced in April, Cerberus agreed to pay H&R Block as much as $800 million for Option One Mortgage Corp., which focuses on subprime loans. This price represents a significant discount on the price H&R Block was originally looking for, said to be $1.3 billion. But with the ongoing and increasingly severe problems in the credit markets, even that discount may fail to justify the deal.
The Reuters report indicates that Cerberus may be interested only in Option One's loan servicing unit, rather than the whole company. While Option One is apparently a money loser, the loan servicing business holds some value. Whatever the outcome of the Cerberus deal, H&R Block announced that Option One will no longer make loans, and will concentrate on servicing existing loans.
Cerberus deal for H&R Block subprime unit in trouble
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Reader Comments (Page 1 of 1)
8-31-2007 @ 7:04AM
justpicky said...
CEREBUS IS TRYING TO BUYOUT , MANY COMPANIES .....
CHRYSLER , TOWER AUTOMOTIVE AND MANY OTHERS ......