Sallie Mae, the US student lender, has filed a lawsuit for damages of $900 million against a consortium who agreed to buy them but then revised their offer.
Reports from Reuters say that the consortium, which includes JC Flowers & Co and Friedman Fleischer and Lowe and the major banks JP Morgan Chase & Co and Bank of America Corp., agreed a deal to pay $25 billion for Sallie Mae in April 2007.
However, the credit crisis has created problems for the deal and legislation has slashed subsidies to student lenders leaving shares in Sallie Mae below the $60 per share price agreed by the consortium. As a result the consortium sent a revised offer of $50 per share last week.
“Sallie Mae has honoured its obligations under the merger agreement. We ask only that the buyer group do the same,” says Albert Lord, chairman of Sally Mae.
“The lawsuit filed by Sallie Mae rests on a fundamental misunderstanding of the terms of our contract, and is without merit,” a spokeswoman for the group of buyers contends.