Funds News

UPDATE 4-Guaranty bid deadline Tuesday, Corus Sept 3-sources

* Private equity group may bid on Guaranty -sources

* Most of Corus assets in condo loans -source

* Guaranty off 18.4 pct, Corus down 23.7 pct

* Guaranty doesn’t think it can operate as going concern (Adds details from Guaranty filing in paragraphs 9-10)

By Paritosh Bansal and Megan Davies

NEW YORK, Aug 17 (Reuters) - A U.S. regulator has extended a deadline to bid on Guaranty Financial Group GFG.N assets to Tuesday, while bids for another troubled lender, Corus Bankshares Inc CORS.O, are due Sept. 3, sources familiar with the situation said on Monday.

Potential bidders for Guaranty, the second-largest publicly traded bank in Texas, include at least one private equity consortium, the sources said. Bids had been due on Monday.

The group, which is led by financial services executive Gerald Ford, includes Blackstone Group BX.N, Carlyle Group [CYL.UL], Oak Hill Capital and TPG [TPG.UL], the sources said.

The private equity group’s interest in the bank comes despite ongoing uncertainty around Federal Deposit Insurance Corp rules for investments by such firms in failed banks.

The FDIC kicked up a storm last month when it proposed tough guidelines for private investors seeking to buy failed banks, suggesting such groups should have to maintain higher capital levels and support the banks they buy.

But such investors argue the guidelines would unfairly place an onerous burden on them and warn that the rules, if finalized as they are, would chill private investments in banks.

The Ford-led group was given access to Guaranty’s books over the weekend, one of the sources said.

The FDIC, which is handling the sales, declined to comment. Guaranty and Corus were not immediately available for comment. The sources are anonymous because the talks are private.

Guaranty said in a filing to regulators on Monday that it no longer believes that it will be able to continue as a going concern. It said it continues to co-operate with regulators while they pursue alternatives for the bank.

“Any such transaction would not be expected to result in the receipt of any proceeds by the stockholders of the company,” it said.


Investors in Guaranty, which had about $14.4 billion in assets as of March 31, include companies run by billionaire Carl Icahn and by Robert Rowling, whose investment firm owns the Omni Hotels chain.

The Austin-based lender, which began operations in 1988, is considered attractive for its more than 150 branches in Texas and California.

Last month, Guaranty said it will probably fail after loan losses and write-downs left it “critically” short of capital. [ID:nN24461637]

Chicago-based Corus, which had assets of about $7.1 billion as of June 30, also said last month that it was “critically undercapitalized.” [ID:nN31434604]

The company has struggled with what it has termed “a rapid and precipitous decline” in the value of collateral securing condominium construction loans, including many in Arizona, southern California, southern Florida and Nevada.

Most of the bank’s assets are in condominium loans, one of the sources said, adding that with only 11 branches the bank had little franchise value.

Corus was incorporated in Minnesota in 1958.

So far this year 77 banks have failed. Colonial Bank, a unit of Colonial BancGroup Inc CNB.N, became the largest bank failure this year when it was closed on Friday. Its assets were bought by BB&T Corp BBT.N in an FDIC-assisted deal.

Guaranty Financial closed down 18.4 percent at 40 cents on the New York Stock Exchange, while Corus was off 23.7 percent at 37 cents on Nasdaq. (Reporting by Paritosh Bansal and Megan Davies; Editing by Robert MacMillan, Phil Berlowitz, Gary Hill and Richard Chang) (For more M&A news and our DealZone blog, go to