LEND Visits the Loan Sharks

June 4 (Bloomberg) -- Accredited Home Lenders Holding Co., the subprime mortgage lender that said in March its survival might be in doubt, will be sold to private-equity firm Lone Star Funds for about $400 million in cash.

Lone Star Fund V LP agreed to pay $15.10 a share for Accredited, the companies said in a statement. The offer for San Diego, California-based Accredited is 9.7 percent more than its closing share price of $13.76 on June 1.

Defaults on subprime mortgages, made to borrowers with poor credit records, saddled Accredited with losses and prompted bankers to curtail credit. Accredited said in March that its auditor wasn't sure the company could survive, and the shares fell as low as $3.77. Private-equity firms are buying home lenders at beaten-down prices and planning to sell when the market turns.

``We believe this agreement is the best alternative available to protect shareholder value,'' Chief Executive James Konrath said in the statement. ``In Lone Star, we have found a partner who has a record of helping companies like ours successfully address financial and operational challenges.''

The shares rose $1.55, or 11 percent, to $15.31 at 9:39 a.m. New York time in Nasdaq Stock Market trading on speculation on higher bid may emerge.

Accredited had a market value of more than $1 billion a year ago before the subprime mortgage industry began its swoon. The stock had lost half its value since the start of this year.

Accredited has yet to file its annual report with securities regulators and last month announced that its first-quarter filing also will be delayed. Grant Thornton LLP resigned as the company's auditing firm in April.

In March, trying to stave off a cash shortfall, Accredited took out a $200 million loan from the hedge fund Farallon Capital Management LLC. The loan was secured by Accredited's assets at 13 percent interest and guaranteed the hedge fund a 7 percent premium, or $14 million, if the loan was repaid within the first year.