Kansas City, Missouri-based NovaStar Financial Inc. said Wednesday that the company “does not intend to proceed with its previously announced offering of rights to purchase $101,175,000 in shares of 9.00-percent Series D-2 Mandatory Convertible Preferred Stock.” The lender, which is feeling the pinch of the subprime fallout, cancelled the offering when management determined certain conditions in the contract could not be met in today’s volatile market.
NovaStar’s independent auditor also created a roadblock for the lender by saying the auditing company would not issue a consent associated with the rights of the offering unless NovaStar agreed to re-issue its 2006 financial statements with a footnote mentioning some of the company’s pending matters.
Due to the many changes and instabilities in the mortgage market, NovaStar said it’s responding with a comprehensive restructuring plan, which includes significant staff reductions and plans to close 12 retail origination offices.
In a press release, the lender also said it would reduce its retail lending workforce from 400 employees to 125 employees, leaving the organization with a work force of approximately 600 staff members.
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