ABFS Cites Liquidity Problems

American Business Financial Services Inc., a Philadelphia-based company that originates, sells, and services home mortgage loans via subsidiaries, has announced that it cannot repay maturing debt obligations until a registration statement has been okayed by the Securities and Exchange Commission.ABFS said it filed the registration statement with the SEC in October, and cannot sell subordinated debentures until it is declared effective. The company said it cannot predict "whether or when" it will get through the SEC registration process. "The company's limited ability to sell subordinated debt during the second quarter of fiscal 2005 and the level of subdebt redemptions experienced during this period seriously depleted the company's cash," ABFS said. As a result of the liquidity problems, the company said it is not in compliance with several requirements of its credit facilities. "Under the terms of these credit facilities, this noncompliance creates an event of default, and the lenders may declare all amounts outstanding under the facilities immediately due and payable; however, to date, the lenders have not elected to take such action," ABFS reported.