After the close Novastar Financial (NFI-NYSE) pulled the wool over the naysayers, or so it is trying to say.  The company has received an additional $100 million in liquidity commitments arranged by Wachovia Capital Markets.  This would replace and expand an existing agreement between the two.  The agreement comes at One-Month LIBOR + 350 basis points.

But here is the kicker: The company has hired Bear Stearns to explore strategic alternatives.  The alternatives are including but not limited to a potential sale or other change in control.  The stock closed down at $5.03, and its 52-week trading range is $3.25 to $38.49.  If this can occur, it may offer a floor to the rest of the sub-prime slime operators.  Shares are up 14% at $5.76 in after-hours activity. 

With the stock off more than 80% one has to wonder how realistic it would be that the company could actually secure a successful shareholder vote that would approve the sale.  If nothing else, the company has at least figured out how to issue a press release that may stabilize the stock.

Jon C. Ogg
April 11, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.