* Private equity firm to get shrs at 95 pct discount
* Pacific Capital posts 8th straight qtrly loss
* Shares sink as much as 57 pct
(Recasts, adds details, updates stock movement)
BANGALORE, April 29 Billionaire banker Gerald
Ford has agreed to buy a 91 percent stake in struggling lender
Pacific Capital Bancorp PCBC.O for $500 million.
The company will sell 225 million shares at 20 cents a
share to Ford's private equity firm Ford Financial Fund. The
offer is at a 95 percent discount to the stock's Wednesday's
close of $4.11.
"We are taking these actions today as the best alternative
available to us to assure the company's future," said Edward
Birch, chairman, Pacific Capital Bancorp.
Pacific Capital will also sell 455,000 shares of newly
created preferred stock to the fund at $1,000 per share.
Shares of the company were down 47 percent at $2.18 in
afternoon trade on Nasdaq. About 26 million shares exchanged
hands by 1255 ET, versus the stock's 50-day moving average of
2.6 million shares.
For a graphic on Pacific Capital's stock performance:
The Santa Barbara, California-based lender, hit by a steep
fall in property prices in its residential construction
portfolio, has been exploring strategic alternatives to
strengthen its capital base.
Following the investment, the U.S. Treasury -- which has
given the lender $188 million in bailout funds -- will own 7
percent, the company said in a statement.
The company, however, will need to get approval from the
Treasury to exchange its preferred shares and warrants into
common stock at 20 cents a share.
Both Gerald Ford and Carl Webb, who is a senior principal
at Ford Financial Fund, will join Pacific capital board on
closing of the investment.
Texas banker Ford is known for making fortune by buying and
selling distressed thrift banks -- the most successful being
his sale of Golden State Bancorp to Citigroup (C.N) in 2002 for
about $5.3 billion.
The bank holding company reported its eight straight quarterly
loss of $79.9 million, or $1.71 a share.
Sandler O'Neill Partners served as the financial adviser to
Pacific Capital Bancorp, while J.P. Morgan advised Ford
(Reporting by Sweta Singh in Bangalore; Editing by Vinu
Pilakkott and Gopakumar Warrier)