Wilshire Increases Stake in Servicing Subsidiary.(Wilshire Financial Services Group Inc. buys 49.99% of Wilshire Credit Corp.)(Brief Article)

Wilshire Financial Services Group Inc. has entered into an agreement to purchase a 49.99% equity interest in Wilshire Credit Corp., a servicer handling an approximately $4 billion portfolio of subprime and damaged residential and commercial loans, from the receiver of the now-collapsed Capital Consultants LLC, a money manager and pension fund advisory company.

WFSG currently owns the remaining 50.01% of WCC, and will pay $10.5 million for the remaining equity in the company.

WFSG said in a written statement, "The liquidation bond associated with this minority interest, which would have entitled the receiver to a $19.3 million preference upon liquidation of WCC and the right to convert such interest into the company's common stock, will be terminated." The agreement is subject to approval by the Federal District Court of Oregon.

In conjunction to the sales agreement, WFSG has also signed an agreement to settle its litigation arising from the collapse of Capital Consultants.

According to WFSG, its cash cost of the settlement and stock acquisition will total approximately $15 million, plus a share of the proceeds from a sale of real property.

The company will accrue a first-quarter 2002 pretax expense of approximately $3.6 million in connection with the settlement and related minority interest acquisition.

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