FBOP stops short of investing in Doral Financial, will support alternate plan at July 17 meeting

By Lisa Kerner

Charlotte, N.C., June 25 - FBOP Corp. has dropped its plans to invest in Doral Financial Corp. following completion of its diligence process, according to a company news release.

However, FBOP, Doral's second-largest shareholder with a 4.6% stake in the company, said it intends to vote in favor of the proposed investment transaction under which Doral Holdings Delaware, LLC will purchase $610 million of Doral common stock for $0.63 per share. Doral Holdings will be registered as a bank holding company and would own about 90% of Doral's common stock following the recapitalization.

Doral shareholders of record as of June 11 will be asked to vote on the deal at the company's annual meeting on July 17.

On June 4, Doral announced it had received an unsolicited offer from FBOP to purchase $610 million of Doral common stock for about $1.41 per share, or an 80% ownership interest in Doral. FBOP is a privately held Oak Park, Ill., bank holding company.

Doral Holdings has a total of $215 million worth of equity commitments to fund its proposed investment in Doral as part of its May 16 stock purchase agreement. The newly formed entity includes investors Bear Stearns Merchant Bank, Marathon Asset Management, Perry Capital, the D.E. Shaw group, Tennenbaum Capital Partners, Eton Park Capital Management, Goldman Sachs & Co., Canyon Capital Advisors and GE Asset Management.

"We are now focusing our attention on obtaining the necessary shareholder approval of the Holdings investment, which is a critical component of Doral's recapitalization process," Doral Financial chairman Dennis Buchert said in a company news release.

"The recapitalization of Doral will mean that the company is positioned to move forward with its efforts to build the potential of the franchise and, in turn, value for all shareholders and the communities Doral serves."

Doral is a San Juan, Puerto Rico, financial services company.

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