HomeGold Divests, Reports 2Q Loss

HomeGold Financial Inc., Greenville, S.C., has announced an agreement in principle to sell the majority of its small business loan division's assets and a retail mortgage unit in Louisiana in order to focus on the company's nonconforming mortgage business.HomeGold, formerly Emergent Group Inc., also reported a pro forma net loss from continuing operations of $4.4 million ($0.45 per share) for the second quarter. The company said the buyer of the business loan division, which it did not identify, is a major financial services company and that the sale price is expected to be approximately $85 million in cash. The transaction includes all the operations of the small business loan division, Emergent Business Capital Inc., except its asset-based lending unit. The planned sale also includes Emergent Commercial Mortgage Inc., Emergent Business Capital Equity Group Inc., and Reedy River Ventures LP. The retail mortgage unit in Baton Rouge, La. -- Sterling Lending Corp. -- will be sold for $1.5 million to First National Security Corp., Beaumont, Texas. Kevin J. Mast, HomeGold's chief financial officer, said the sales will complete the company's plans to focus on the nonconforming mortgage market. "The sale of the commercial unit provides HomeGold with over $58 million net proceeds, which can be used as operating capital in building its core mortgage business," Mr. Mast said. "This divestiture provides HomeGold with the opportunity to focus our management and capital resources on our mortgage business."