Skip to main content

FIDELITY & LAND AMERICA - the story continues


"Door Buster" is to Black Friday, as Turkey is to Thanksgiving. And so it will go on the day after the turkey day. Sleep deprived and crowd-worn citizens will set out in hopes of buying the things they want (or think they want, anyway) at a discount to what they had previously been selling for.

Business types (at least certain title insurance types) seem to be more interested in maximizing a four day work holiday this year, so they concocted their own door buster deal yesterday; before adjourning for Thanksgiving. According to news reports, Fidelity is buying LandAmerica's title insurance business after all - after LandAmerica files for bankruptcy protection and sheds off some less desirable assets. LandAmerica will then sell its principal title underwriting units to Fidelity National for a combined $298 million. Chicago Title will buy Commonwealth for $158.6 million, and Fidelity National will buy Lawyers and United for $139.4 million.not all of LandAmerica.

You may recall that on November 7th, LandAmerica & Fidelity announced a merger agreement. (more like a $126 million takeover). Two weeks later, Fidelity cancelled out on the deal during the due diligence period. Yesterday, LandAmerica filed for bankruptcy protection.

How bad were LandAmerica's problems? Fitch Ratings downgraded LandAmerica's financial strength and issuer default ratings and placed LandAmerica and its subsidiaries on "rating watch negative". Now understand that I don't actually know what any of that means, but downgrades from rating services are never good. Especially when your company is also reporting third quarter losses of $600 million and nine month losses of $673 million. Not when stockholders' equity plummet by more than half in that same quarter to $485 million. Not when the New York Stock Exchange suspends trading of your shares (which peaked at more than $106 last June, and plunged to about 25 cents in electronic trade).

And that debt that needed to be trimmed off of the deal to lure Fidelity back to the table?
A $290 million investment in auction-rate securities (ARS) from LandAmericas 1031 exchange business that currently cannot be accessed. (1031 exchanges are tax deferral vehicles used by real estate investors. An intermediary holds the proceeds from the sale of an investment property until those funds are deployed to purchase a replacement investment). Those funds were tied up in toxic debt that could not be freed up to meet cash needs. The 1031 company is also in bankruptcy court, and Nebraska State regulators have intervened as well.

Assuming this deal passes muster with the bankruptcy court, and with the various state regulators, and federal anti-trust concerns, Fidelity will control nearly three quarters of the title insurance market nationally.

The deal may well be completed before the year ends.
Labels:

Comments

Post a Comment

Popular posts from this blog

FHA Loans and Condo Sales - Is Relief on the Way?

By all outward appearances, state government in Illinois has ground to a complete halt, with all eyes focused on the Governor's "problem" and all the related fal - der -rah. Its hardly business as usual in Springfield, but not everything has ground to a halt. Several new bills have been introduced this week. That is not to say that they will be of benefit to we the people. Nonetheless, the cogs and gears are turning, and we are hoping for the best. One such proposal comes from Rep. LaShawn Ford of Chicago's west side, who is himself a real estate broker and entrepreneur . He is the author of House Bill 155 , introduced & referred to the Rules Committee Wednesday. It seeks to address one of the most common problems I am seeing in condominium resale transactions these days; the tension between many Declarations of Condominium and FHA loan guidelines. Many Condo Declarations provide Associations with a "right of first refusal," which basically allows t
3 comments
Read more

So.... about the blawg

Nov. 2022 Hello Dear Reader. I started blogging on this site 15 years ago.  Crazy right? May or may not Chicago's longest-running blog about real estate law. I think so, but who knows, Whether it is or isn't doesn't, of course, really matter.   Either way, it's been a blast.  But things change. We've pulled up the tent stakes here and are relocated on other platforms. Want to follow along? Join us on the mothership I'm also writing on LinkedIn Thanks for everything.
Post a Comment
Read more

PLM Title Shuttered

Title insurance is a critically important part of any real estate transaction; or at least it should be. The title company guaranties the "quality" of an owners interest in the property - that there aren't any (unknown) liens or defects. No buyer that I work for will purchase a property without it. Title insurance is only as good as the insurer. We want to know that the insurance company, like the Rock of Gibraltar , will always be there. We want to sleep easy at night, knowing that the client is protected. That said, it was a bit distressing to see that PLM Title Company shut its doors, without any forewarning last week. Worse still, this morning's news is that there is a criminal investigation underway - and that we do not yet know why. Old timers like me shudder with memories of the great Intercounty Title debacle five years ago. Here's to hoping that this one is nothing like that one. Set aside the problems involved trying to make a claim against a defun
6 comments
Read more