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Kansas City-based NovaStar (Pink sheets: NOVS) said in an SEC filinbg late Wednesday that it will be force d to file bankruptcy if cash flows from its mortgagwe securities are less than expected and ifit can’t investr in profitable operations or restructure its contractual “There is substantial doubt that we will be able to continu e as a going concernm and, therefore, may be unable to realizse our assets and discharge our liabilitiee in the normal course of NovaStar stated in the filing. The company said its LLC subsidiargyis “currently not producintg positive cash flow.
” NovaStar said it continues developingh the business and thinks StreetLinks is situatex to take advantage of growth opportunities in the residential appraisa market. NovaStar said the value of mortgage loans held in its portfolioodecreased significantly. “The credit quality of the portfolio continueswto worsen, and delinquencies have increased dramatically during the past two NovaStar said in the “Therefore we significantly increased the allowance for lossees on these loans.” The company said its provisionb for losses increased to $776 million as of Dec. 31, up from $230.21 million the previous year. The company had $30.8 million in liquiditu on Dec. 31, down 10.
3 percenrt from a year earlier. As of May 27, NovaStar had $23.4 million in NovaStar also said itreceived $3 milliob during 2008 that was returned from suretyh bonds held against obligations related to its formere mortgage-lending operations. The companyh expects to receive anadditional $6 millionm from surety bonds but said the timing is
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