Infuses More Than $450 Million Into Failed Thrift
PHOENIX (AP) _ Pinnacle West Capital Corp. said it injected about $465 million into MeraBank Federal Savings Bank and was released from obligations from its 1986 purchase of the savings and loan.
Richard Snell, chairman of the $7 billion holding company, said Thursday the transfer of funds, including interest, consisted of about $310 million in cash and a $155 million unsecured note, payable in 12 years.
He said the infusion ended Pinnacle West’s obligation to MeraBank, which federal regulators seized Jan. 31.
″We have now put the MeraBank issue behind us. This ends a very difficult period for Pinnacle West and our shareholders but is only the beginning of the company’s recovery plan,″ Snell said in a statement.
Pinnacle West bought MeraBank in December 1986. Before it got rid of the state’s largest thrift, it was forced to restructure $676 million in debt.
The S&L, known as MeraBank before the Resolution Trust Corp. took over, lost over $200 million in both 1988 and 1989, leading to Pinnacle West’s $551.4 million loss last year.
Last Dec. 6, the RTC, the Office of Thrift Supervision and the Federal Deposit Insurance Corp. agreed to release Pinnacle West from a ″keep-well″ agreement in exchange for injecting $450 million into MeraBank to meet capital requirements.
Snell said that before completing the infusion Thursday, the company closed an agreement with a consortium of financial institutions to provide long-term financing for the $310 million. Salomon Brothers Inc. of New York served as Pinnacle West’s investment banker in the transaction.
Pinnacle West previously had arranged interim financing through a group of New York banks to satisfy the agreement. Those funds were not used, Snell said.
He added that he hoped to sell Malapai Resources Co., a uranium-mining company, by mid-year. Divestment of Malapai would leave Pinnacle West with just three subsidiaries, Arizona Public Service Co., the state’s largest utility, Suncor Development Co., and El Dorado Investment Co.