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Amresco Files For Bankruptcy

Company to sell noncash assets for $309 million to LLC whose principals include Goldman Sachs Group Inc.

July 3, 2001


AMRESCO, INC., (NASDAQ: AMMB profile) announced Monday that it has filed a voluntary petition for reorganization relief pursuant to Chapter 11 of the United States Bankruptcy Code. In conjunction with the filing, the company said it has entered into an asset purchase agreement with NCS I LLC, a limited liability company, the members of which are Renewal Partners LLC, affiliates of Fortress Investment Fund LLC and Goldman Sachs Mortgage Company, an affiliate of Goldman Sachs Group Inc., whereby, subject to Bankruptcy Court approval and a mandatory auction process, the company will sell substantially all of its assets, exclusive of its cash and cash equivalents, for a purchase price of $309 million, subject to certain adjustments. The purchase price is comprised of $151 million of cash, subject to adjustment, a $25 million six-month note and the replacement of current warehouse indebtedness of $133 million.

The Company's two operating subsidiaries -- AMRESCO Commercial Finance, Inc. and AMRESCO Independence Funding, Inc. -- have received commitment letters for up to $275 million of warehouse financing from NCS II LLC
(a NCS I LLC affiliate), and are not included in the bankruptcy filing. The replacement warehouse financing is subject to Bankruptcy Court approval as it will be guaranteed by AMRESCO and secured by its assets.

AMRESCO's Chairman and CEO, Randy Brown said that a previous deal with Renewal Partners and Fortress fell through because "the company's portfolio of business lending residuals experienced significantly reduced cash flows and deterioration in value due to continued increases in delinquencies and projected credit losses."

Brown went on to say, "because the company has been unsuccessful to date in finding traditional warehouse financing to fund loan origination activities, this process will also allow AMRESCO to preserve the value of its loan origination franchise."

Shares of AMRESCO were trading at eighty-seven cents this afternoon, down $0.07.

Sam Garcia has been in mortgage lending since 1980, and is managing editor of MortgageDaily.com. He also owns and operates CloseNow.com, a real estate portal site.

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