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Auditor doubts NovaStar’s health

By Gary Jacobson

September 5, 2007 at 1:04pm

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It’s one thing when stock market analysts knock your company’s prospects. Even worse when your auditor does the same.

Subprime lender NovaStar Financial cancelled plans to raise $101 million Tuesday saying its auditor, Deloitte & Touche LLP , wanted to include a statement in the company’s financial disclosures about the “uncertainty of NovaStar’s ability to continue as a going concern.”

Kansas City-based NovaStar also said it was cutting another 275 jobs, dropping the employee count to 600, down from more than 2,000 at the end of 2006.

“We are pulling back to focus on NovaStar’s core strengths and preserve liquidity,” NovaStar CEO Scott Hartman said in a statement.

Scott Valentin, an analyst at Friedman, Billings Ramsey & Co., wrote that “an eventual liquidation of the company is highly probable.”

On the web
NovaStar survival at risk as First American cuts jobs - Reuters
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