UPDATE 1-Lone Star says prepared to buy Accredited for less

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NEW YORK, Aug 30 (Reuters) - Lone Star Funds, which has been seeking to abandon its $400 million purchase of Accredited Home Lenders Holding Co LEND.O, said on Thursday it was prepared to buy the struggling subprime mortgage lender for a reduced price.

In a letter to Accredited's board, the private equity fund said if the lender agreed, it was prepared to amend its offer to $8.50 a share. Accredited shares closed on the Nasdaq at $6.31 on Thursday.

Accredited was not immediately available for comment.

Accredited agreed on June 4 to be acquired by Lone Star for $15.10 per share. After the Dallas-based fund indicated it wanted to back out of the deal, Accredited sued in Delaware Chancery Court to enforce the merger.

San Diego-based Accredited said on Aug. 22 it would close much of its operations and cut 1,600 of its 2,600 jobs to help it survive the turmoil in the mortgage market.

Earlier in the month, the company said it could not guarantee it would remain a "going concern," and that bankruptcy was possible.

Subprime lenders make loans to people with weaker credit histories. Several dozen have quit the industry this year, including many that went bankrupt as delinquencies and defaults rose.

Accredited has said it made $15.8 billion of home loans last year.