August 13, 2007 (LPAC)--A year ago, the stock of Accredited Home Lenders was selling for as much as $35. That was a long time ago. In March of 2007, AHL's stock plunged, going from $25 to $5, forcing the company to the edge of bankruptcy. At that point, private equity firm Lone Star thought they had a bargain, and offered $400 million for the firm in June, imagining that the true value of its stock was about $15 a share. Today, AHL's stock, although it had recovered some, dropped 75%, to $5.82 per share, leading Lone Star (who had probably discovered that many of AHL's "assets" were 'worth less' than they thought) to run for the door, less than 48 hours before the merger was set to be consummated.

Accredited has now sued Lone Star, crying foul, and insisting that Lone Star "give us the money, or else!" They say they have $1.6 billion in "warehouse" loans available, but only if Lone Star follows through on its purchase offer. Of all mergers which the ongoing collapse and resulting credit crunch has scuttled, this is the first one to end in court. But it won't be the last.