NFI Cancels Stock Deal & Cuts More Jobs

Subprime lender NovaStar Financial said Tuesday that it has canceled a previously announced stock offering that would have bolstered its liquidity, a decision that raises new doubts about its future.The Kansas City, Mo.-based real estate investment trust also cut its retail staff to 125 workers (from 400), closing 12 locations in the process. It said it will only fund retail loans on a "limited basis," acting as a broker in some cases. (It closed its wholesale unit about two weeks ago.) In a statement, company chief executive officer Scott Hartman said secondary-market conditions have "deteriorated substantially, so we are modifying our business model and further reducing costs for this difficult environment." The stock offering, which involved the sale of convertible preferred shares, would have raised $101 million. Its shares were trading down 17% at deadline time. The company can be found online at http://www.novastarmortgage.com.