Shares of embattled subprime lender New Century Financial Corp. opened down nearly 20% on Friday after analysts predicted the Irvine company soon would file for bankruptcy protection.
Friday’s decline brings New Century’s stock drop to 90% since February.
On Thursday, New Century said it stopped making loans after investment banks halted lines of credit.
The move stands to have a crippling effect on New Century if it doesn’t line up more financing.
New Century did refinance $710 million of loans with financing from Morgan Stanley, according to reports, but hasn’t been able to come to terms with other lenders.
“We feel it is likely that New Century just used up its last option to avoid collapse, and believe a bankruptcy filing or liquidation may well be announced in the next week or two,” wrote JPMorgan analyst Andrew Wessel, according to Reuters.
Merrill Lynch & Co.’s Kenneth Bruce went further in saying New Century faces “likely liquidation in bankruptcy.”
Both analysts said a bankruptcy filing “seems imminent.”
For more on this story, see the March 12 edition of the Business Journal.
