Freedom Financial to receive more for loan portfolio

A Springfield-based consumer finance company facing an asset sale due to a lack of financing has found a new buyer willing to pay more for its subprime auto loan portfolio.

Earlier this month, publicly traded Freedom Financial Group Inc. (OTC: FFGR) entered into an agreement to sell the loan portfolio to Houston-based First Investors Financial Services Inc. (OTC: FIFS) to pay off a $15 million revolving line of credit coming due at the end of January. The balance owed to New York-based lender ReMark Capital Group LLC is about $12 million.

On Oct. 20, however, the company terminated the agreement in favor of a new suitor, South Carolina-based American Credit Acceptance LLC. ACA's offer was about $1.2 million higher than First Investors' bid, according to Securities and Exchange Commission filings.

The same day, Freedom Financial also filed a proxy statement with the SEC notifying its 2,750 shareholders that they could expect to see a return of 17 cents to 21 cents per share once the $15.8 million sale - expected to close Dec. 15 - is complete. Under the agreement with First Investors, the estimated payout to shareholders would have been between 12 cents and 17 cents a share.

The pending portfolio sale to ACA as well as Freedom Financial's subsequent liquidation of assets and dissolution requires approval from shareholders, who are scheduled to meet Nov. 30 at University Plaza hotel for a vote.

Freedom Financial learned at the end of June that ReMark, a Goldman Sachs Group Inc. affiliate, had decided not to renew or extend a $15 million loan secured by the company in January 2008. Freedom Financial consequently stopped purchasing auto receivable notes in late September and began seeking prospective buyers for its $19 million auto loan portfolio.

Freedom Financial acquires auto loans from car dealers in Missouri, Illinois, Indiana, Kansas, Oklahoma and Tennessee that cater to customers with low credit scores.

Freedom Financial was created in January 2003 through the bankruptcy reorganization of its predecessor, Stevens Financial Group, known in local circles for bilking some 2,800 investors out of $54 million.

Most of Freedom Financial's stockholders are holdovers from Stevens Financial Group, whose owner Clarence Stevens was convicted of securities fraud and related offenses and sentenced to five years in prison. Stevens purchased the company from Damian Sinclair, who also faced similar charges but died in December 2003 before he was able to stand trial.