Westlake Outbids Carfinco to Scoop Up Western Funding
Westlake Services LLC, a Los Angeles-based subprime auto lender, beat out initial, “stalking horse” bidder Carfinco Financial Group Inc. at a bankruptcy auction for Las Vegas-based Western Funding Inc.’s assets this week.
Westlake agreed to pay $26.2 million for Western Funding’s $34.5 million portfolio, topping Carfinco’s $24.5 million bid.
Although Carfinco looked to be a shoe-in, CEO Tracy Graf told Auto Finance News earlier this month that nothing was certain until after the bidding process. In a statement issued after the auction, Graf said the bidding had reached a purchase price that exceeded Carfinco management’s threshold for risk versus return-on-equity.
Westlake will also pay $815,000 to Carfinco ― a $365,000 breakup fee and $450,000 of expense reimbursement, protections put in place when the Canadian lender agreed to serve as lead bidder in November.
Western Funding, a 51-year old company, filed for bankruptcy in September.
Like a lot of big bankruptcy cases, a battle erupted between unsecured creditors and the debtors over how to best maximize the bankrupt Western Funding’s value. At one point, there were at least five potential bidders looking at the lender.
A court appointed ombudsman, Timothy Yoo, filed a statement yesterday over consumer privacy concerns. He said the proposed sale of Western’s auto finance contracts to Westlake violates Western’s privacy policy and will require analysis under section 332 of the bankruptcy code.
Westlake Financial increased its revenue to $509.1 million in 2012, from $266.8 million in 2010. It employs 1,230 people and has more than $1 billion in receivables.
