National City Corp will get about US$6 billion from private investors in a deal that provides much-needed capital to a Midwestern bank heavily exposed to the worsening mortgage and housing market, according to reports.
National City officials were negotiating final terms of the transaction with a group of investors led by Corsair Capital LLC, a New York private equity group, the Wall Street Journal and the Plain Dealer reported on their Web sites on Sunday, citing sources they did not identify.
The parties were aiming to seal the deal by yesterday, the Journal said. National City is scheduled to report first-quarter results today.
National City spokeswoman Kelly Wagner Amen declined to comment on the newspaper reports.
Cleveland-based National City is Ohio’s biggest financial institution, with assets of US$150 billion. But the mortgage crisis has left it with troubled assets, and its stock has plunged to multiyear lows.
Like Washington Mutual Inc and Wachovia Corp, which also got huge cash infusions this month, National City is offering its financial rescuers shares at prices substantially below the prevailing market price, while diluting the holdings of existing shareholders, the Journal reported.
The plan calls for the investors to pay about US$5 a share, the Journal said. Corsair will hold a 9.9 percent stake in National City. Corsair partner Richard Thornburgh is expected to join the bank’s board, but National City’s top management will remain in place.
Amid its struggles, National City on April 1 hired New York investment bank Goldman Sachs to look at options, including a possible sale, analysts said at the time.
National City shares fell US$0.16 to US$8.33 at the end of trading on Friday. The shares have traded within a one-year range of US$6.56 and US$38.32.
National City operates about 1,400 bank branches in Ohio, Illinois, Indiana, Kentucky, Michigan, Missouri, Wisconsin, Pennsylvania and Florida.
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