Investors like what appears to be a going-out-of-business sale by Irvine mortgage lender ECC Capital Corp.
Shares of ECC closed up more than 20% Wednesday, a day after the company said it’s selling its subprime loan business to Bear Stearns Cos.
ECC, which has a market value of about $100 million, is selling its dominant unit for a mere $26 million.
Subprime loans are made to borrowers with imperfect credit and have been the bulk of ECC’s business.
Investors, who are set to get a sizable dividend from the sale, likely see it as the best option amid a slowdown in mortgages.
The sale could signal a winding down of ECC. The company said it could “explore strategic alternatives with respect to maximizing the value of its remaining assets.”
As for what’s left of ECC, “alternatives being considered include the sale of remaining operating assets, the residual interests and associated servicing rights or, in the case of the residuals, collection of remaining cash flows through 2010,” the company said.
