Credit Crisis Finds New Victims

The list of suffering companies keeps growing and growing.

The devastation wrought by the subprime mortgage crisis and the related credit crunch seems unending, affecting companies in a smorgasbord of ways. The newest examples:

• On Wednesday, PHH Corp. announced that General Electric Capital terminated its agreement to purchase the company for about $1.7 billion. Under the deal, GE Capital was to then sell PHH’s mortgage business to an affiliate of The Blackstone Group. But as is becoming increasingly common, the Blackstone affiliate was not able to obtain the requisite debt financing.

• On Thursday, State Street Corp. said it would record a $279 million after-tax charge to address legal exposure and other costs associated with underperforming fixed-income strategies managed by State Street Global Advisors, which were adversely affected by exposure to subprime mortgage markets.

“Some of our customers that were invested in the active fixed-income strategies have raised concerns that we intend to address,” said State Street CEO Ronald Logue. “Nevertheless, we will continue to defend ourselves vigorously against inappropriate claims, including those that seek recovery of investment losses arising solely from changes in market conditions.”

The company also announced that William Hunt has resigned as president and CEO of State Street Global Advisors (SSgA).

• Also on Thursday, Dura Automotive Systems, whose emergence from bankruptcy has been delayed due to the credit crunch, received a one-month extension of loans that are financing its bankruptcy reorganization, the Associated Press reported.

If it had not received the extension, Dura could have faced foreclosure from its senior lenders, according to the report. The company is said to be seeking financing to take it through the end of June.

Discuss

Your email address will not be published. Required fields are marked *