Canadian Firm Said to Make Offer for Lincoln

An unidentified foreign company has offered to buy troubled Lincoln Savings & Loan in Irvine, but federal regulators said Tuesday that they can do little with the offer until Congress passes pending legislation to rescue the S&L; industry.

Karl T. Hoyle, a Federal Home Loan Bank Board spokesman, would not identify the foreign bidder but said it was a North American firm seeking federal assistance in buying Lincoln.

A source in the S&L; industry, however, said the potential buyer is a large Canadian real estate company that is interested in Lincoln’s master-planned communities in Arizona, particularly the 20,000-acre Estrella project southwest of Phoenix.

Lincoln was seized by regulators April 14, the day after its parent company, American Continental Corp. of Phoenix, filed for protection from creditors under federal bankruptcy laws. The bank board said Lincoln was being run in an “unsafe and unsound” manner.

Although the government has not been soliciting bidders for the thrift, a sale is considered likely once Congress passes expected legislation to finance a bailout of the beleaguered thrift industry.

Until that happens, however, the bank board is not working on thrift purchases that would require federal assistance, such as the bid for Lincoln, Hoyle said. The foreign company is the only party showing any interest in buying Lincoln at this time, he said.

Hoyle acknowledged that a purchase of the S&L; with regulatory assistance probably would eliminate any chance that American Continental shareholders and bondholders would get back any of the money they have invested in the firm.

Among the company’s bondholders are about 22,000 buyers of unsecured debt securities. Some of the investors have said they were persuaded by Lincoln personnel to withdraw funds from insured accounts to buy the bonds, which are not protected by federal deposit insurance.

Bert Ely, an Alexandria, Va., industry consultant, said shareholders and bondholders will likely be wiped out.

It is likely to cost regulators $1 billion to $2 billion to correct Lincoln’s problems, he said, and they will probably try to recoup that amount from American Continental’s assets--the only potential source of funds for shareholders and bondholders.

“Lincoln is potentially a liquidation candidate,” Ely said.

Most of Lincoln’s assets are tied up in real estate development. American Continental, using Lincoln’s deposits for financing, has become the largest land developer in Arizona.

Estrella is the S&L;’s largest real estate project. The partially built project is designed as a self-sufficient city with an eventual 200,000 residents in 78,500 residential units along with schools, hospitals, churches, hotels, shopping centers and other office and commercial buildings.