Shustek plans to make Vestin private firm

Kevin Rademacher

Monday, Dec. 22, 2003 | 11 a.m.

Vestin Group Inc. Chief Executive Michael Shustek wants to take his company private.

Vestin, a Las Vegas-based commercial lender, this morning announced that Shustek has notified the company's board of directors of a plan to buy all of the outstanding shares of the company he does not already own.

The move would take the publicly traded company private. Vestin stock jumped more than 5 percent on the news this morning, up 10 cents per share to $2.

Shustek owns 3.2 million shares in the company, about 60 percent of the 5.3 million outstanding shares, based on recent filings with the Securities and Exchange Commission.

Directors and executive officers in the company control more than 76 percent of Vestin's stock, including Shustek's shares and outstanding options to purchase additional shares.

Steve Stern, a spokesman for Vestin, said no details have been worked out regarding the timing or price of a Shustek offer.

"He has only told (the board) that he is interested in acquiring the shares," Stern said.

Stern also said that the buyout would not affect any investors in the company's mortgage lending funds.

"There're two constituencies here," he said. "There's stockholders in the company and fundholders. It has no impact on fundholders. ... The funds are still SEC-reporting entities. All it does is take the company private."

Vestin went public in 1999 through a reverse merger with publicly traded Sunderland Corp. The reverse merger, which involved Shustek-controlled Del Mar Mortgage Inc., was completed in 2000 and the new company changed its name to Vestin Group.

Vestin in November reported a third-quarter loss of $1.2 million compared to net income of $1.9 million a year earlier.

Revenue for the third quarter slipped 60 percent to $3.5 million, down from $8.8 million. The company blamed the loss on lower loan demand caused by weak economic conditions and increased competition from traditional lenders.

Last month, Vestin announced that its Vestin Fund III was approved by the SEC. The $100 million fund "will invest in income-producing real estate projects and short- and medium-term loans secured by real estate," a Vestin release said.

In the company's quarterly filing with the SEC, Vestin said the new fund will invest in and operate multi-family, assisted living, office, industrial and retail properties. Those investment opportunities will give the company the opportunity to earn real estate commissions, advisory fees and property management fees, the filing said.

State regulators are scheduled to begin hearings early next year into allegations that Vestin mishandled two loans to developer Howard Bulloch. In March, Bulloch won a $5 million judgment against Vestin in a separate U.S. District Court case.

Vestin has denied wrongdoing in the Bulloch court case and the regulatory allegations.