FBR to Reduce Stake in First NLC

Friedman, Billings, Ramsey Group Inc., Arlington, Va., has entered into a transaction that will recapitalize First NLC Financial Services, Boca Raton, Fla., while reducing its exposure to the subprime mortgage lender to a 20% equity stake.Sun Capital Partners Inc., Boca Raton, will make a $60 million investment in First NLC, while FBR will make a $15 million investment. This is not the first time First NLC and Sun have teamed up. When First NLC's management reacquired the company in 1999 from the defunct IMC Mortgage, Sun was its partner. When FBR and First NLC agreed to their transaction in January 2005, that deal was valued at $88 million. "Having been through a number of industry cycles, we understand what is needed to restructure our product mix and refocus our strategic operating plan on present opportunities now that a significant amount of origination capacity has exited the nonconforming space," said Neal Henschel, chairman and chief executive of First NLC. The president and chief operating officer of FBR Group, J. Rick Tonkel Jr., said the 20% stake his firm is keeping would allow it to participate in First NLC's upside when the market turns around.