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A Chairman Is Appointed To Rebuild Sallie MaeSallie Mae, the beleaguered student lending giant, on Monday appointed a longtime banking executive as chairman as the company struggles with tighter credit markets and fallout from a failed buyout. SLM Corporation, via Bloomberg NewsAnthony P. Terracciano has experience in turnarounds. Multimedia Sallie Maes ManagementThe news gave Sallie Mae, formally known as the SLM Corporation, its biggest lift since April, when its $25 billion buyout was announced. Shares jumped about 7 percent Monday to $17.83. But shares are down about 70 percent since July when Sallie Mae indicated that the deal was troubled, and is far below the $60 a share offered in the buyout. Anthony P. Terracciano, who turned around financial firms like Dime Bancorp and First Fidelity Bancorp, will become chairman, succeeding Albert L. Lord, who will stay on as chief executive and will become a vice chairman. John F. Remondi, a former Sallie Mae executive who helped transition the company out of being a government-sponsored entity, will return as a vice chairman and chief financial officer. He most recently worked as a portfolio manager at PAR Capital Management in Boston. Fears over Sallie Mae’s financial health have grown as the company confronts a host of troubles. Last year, Congress cut subsidies to student lenders, which prompted Sallie Mae’s proposed suitors — the private equity firm J. C. Flowers & Company, JPMorgan Chase and Bank of America — to try to walk away. Rising default rates and tighter credit markets have also hampered Sallie Mae’s ability to resell loans to investors, a vital source of financing. Sallie Mae is trying to refinance a $30 billion credit line provided by JPMorgan and Bank of America. Last week, the company said it would scale back the number of student loans it will issue. Mr. Terracciano is perhaps best known for steering First Fidelity and Dime out of trouble. Both companies were eventually sold, First Fidelity to First Union Bank, Dime to Washington Mutual. “To the extent that banks consider lending money to Sallie Mae, they may gain more assurance that it has a chairman experienced in navigating a company through troubled times,” Sameer Gokhale, an analyst with Keefe, Bruyette & Woods, said. Mr. Terracciano and Mr. Remondi might counterbalance Mr. Lord, the brusque and strong-willed man credited with turning Sallie Mae into the nation’s largest student lender. He is considered the architect of Sallie Mae’s drive to go public, culminating in last April’s announcement. That deal has dissolved into a bitter courtroom fight over the merger agreement’s $900 million breakup fee. Two weeks ago, Sallie Mae issued $3 billion in new securities to help pay off bad bets that its share price would rise. Tag CloudExternal InformationAdditional InformationChinese Entity Buys a Stake in British Oil Giant...Auction rekindles fears over Vodafone’s US strategy... Magazines Up for Sale, Including Variety... Chinese inflation hits 11 year high... Where Am I?News Main Page - Business - A Chairman Is Appointed To Rebuild Sallie Mae |
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