A new team of managers has joined FirstPlus Financial Group Inc. -- which has begun an acquisition campaign.
The formerly high flying, high loan-to-value lender has purchased substantially all of the assets of Rutgers Investment Group LLC that are related to it commercial and consumer lending business, President and CEO John Maxwell announced.
And other mortgage-related acquisitions may be forthcoming, he suggested.
The purchase, completed July 23, was done for $1.8 million in cash and 500,000 shares of the company's common stock, which closed at $0.18 per share on July 20, the previous trading day. That would have placed the total purchase price at $1.9 million. FirstPlus also agreed to assume certain liabilities of Rutgers'.
"We are excited about the acquisition of Rutgers' commercial and consumer lending business," Maxwell said. "We expect that the Rutgers business will be synergistic with additional forthcoming acquisitions and a key component of the company's future success."
Irving, Texas-based Rutgers has retained an independent consultant to facilitate its applications for licensing as a mortgage banker in 14 states, according to a statement from Dallas-based FirstPlus. It anticipates providing first and second mortgage loans, construction and hard money loans, international letters of credit, and equity and credit lines in those states. After receiving those licenses, Rutgers will act as a broker for licensed lenders in those states.
"There's a lot of activity now," FirstPlus spokesman Jerry Cahn told MortgageDaily.com. "In the last 60 days a new team has come in and taken charge, trying to do things for shareholders. New management is trying to recharge the company and it has a lot of ideas on the table."
This activity includes trying to revive its subsidiary, FirstPlus Financial Investment, which recently emerged from Chapter 11 bankruptcy. That company, which specialized in high LTV, up to 125%, and subprime mortgages, faced FTC charges and a shareholder suit over lack of annual meetings and other charges.
In August 2000, FirstPlus Financial Group reached a settlement with the FTC over FirstPlus Financial Investment's "false and misleading" advertising of its debt consolidation loans in violation of sections of the FTC and Truth in Lending acts.
And in December 2003 as part of a settlement of a class action suit filed by shareholders in U.S. District Court for the Northern District of Texas, FirstPlus Financial Group agreed to pay $5 million to shareholder plaintiffs and their counsel.
In addition, CEO and Director Daniel T. Phillps and Director Jack Roubinek resigned all their positions with the company. Both had been targets of shareholder complaints.