Guaranty Financial Group Inc. in Austin said Monday that it expects to fail unless the Federal Deposit Insurance Corp. takes the rare step of assisting the $14.4 billion-asset company with a deal.
In a filing with the Securities and Exchange Commission, Guaranty said open assistance is "the only remaining means by which the company might raise sufficient capital" for it to survive.
Guaranty's plan involves pairing a "significant equity capital infusion" from private investors, including its current shareholders, with a pledge from the FDIC to absorb a portion of losses from particular assets, the filing said.
Guaranty said it is discussing the potential for assistance with the FDIC and the Office of Thrift Supervision, but has not formally applied for it.
Though the billionaires Carl Ichan and Robert Rowling are among those who hold Guaranty's stock, the company did not specify which shareholders might provide it with capital. It noted that so far it has received only "expressions of interest," not commitments.
But Guaranty stressed that the private capital would not be enough to save it in any case.
"If the FDIC does not approve a plan for open assistance, the company will no longer have the intent and ability to hold its mortgage-backed securities portfolio to recovery," the filing said. Then Guaranty would have to write down $1.75 billion of unrealized losses, raising doubt about its ability to continue as a going concern.
The losses would be taken as of Dec. 31, increasing its preliminary loss for last year fivefold from the previous estimate, to $2.2 billion, Guaranty said.
The company conceded in the filing that open assistance is rare.
Its shares, which have lost about 95% of their value over the past year, closed at 20 cents Monday, down 6 cents.
