Wachovia has a loan on Wells Timberland's lone timber property. It's a mezzanine loan (that this blog has chronicled) that needs to be down to $60 million (from $90 million at the end of August) by mid-October, or the whole amount is due. I am curious how Wachovia's failure (Citigroup took over its retail bank business this morning) will impact any negotiations on the loan. Here is an interesting section from a Wall Street Journal article on Citi's takeover:
I wonder what was in that portfolio of loans that gave Wells Fargo pause, especially since they "didn't have any obvious red flags."Midday Sunday, Mr. Kovacevich dropped a bombshell. Wells Fargo had developed concerns about the health of one of Wachovia's loan portfolios. Unless Wachovia could convince it otherwise, Wells Fargo wouldn't be willing to pay any more than $10 a share.
Wachovia's advisers were surprised because the portfolio in question was smaller than many of its toxic mortgage portfolios and didn't have any obvious red flags.
For the next four hours, Wachovia's team tried to ease his concerns, but Mr. Kovacevich kept repeating: "It's not my call, it's our loan people." Behind the scenes, Wachovia's advisers began to hear from regulators that Wells Fargo was getting cold feet.
2 comments:
Oops! Now Wells Fargo is in the drivers seat. I can't imagine that Wells Timberland REIT equity sales are picking up giving the current market meltdown. Will the Germans ride to the rescue at the end of the month? I doubt it.
Sales were surprisingly good in Sept from what I have heard, probably the best month of the year. It won't be enough to get the mezz. piece down to its required level by 10/17, though. Don't expect big German cash infusion. Tanking Euro and tanking credit markets make Germans nervous. I check daily for 8-k filings...
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