NovaStar Financial shares rise as lenders grant some relief
By RICK BABSON
The Kansas City Star
NovaStar Financial Inc. late Wednesday said Wachovia Bank and its affiliates have eased some lending requirements for the troubled subprime lender.
In a filing with the Securities and Exchange Commission after markets closed, Kansas City-based NovaStar said Wachovia and affiliates cut the net worth the company must maintain by 71 percent, from $517 million to $150 million.
In midday trading, NovaStar shares were up 66 cents, or 8.99 percent, at $8 on the New York Stock Exchange. Shares closed at $8.18, up 84 cents, or 11.44 percent.
In recent weeks, troubles in the subprime sector and a national credit crisis have forced NovaStar to close both is retail and wholesale lending operations and trim down to 600 jobs from the 2,000 employees it had last year.
The company also had to cancel a stock offering that was to raise $100 million in badly needed cash after its auditor raised questions about its ability to survive.
It will try to live off its mortgage loan portfolio until the credit crisis runs its course.