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Parent's bankruptcy hurts troubled thrift

Published Oct. 13, 2005

American Savings of Florida, F.S.B., in Miami, said Monday that the declared bankruptcy on May 31 of its parent company, The Enstar Group, could undermine a capital plan the Florida thrift has filed with federal regulators. Enstar, based in Montgomery, Ala., said on Friday that it and certain of its subsidiaries had filed for Chapter 11 bankruptcy protection from creditors. Enstar said the bankruptcy filing does not include American Savings.

American Savings also said that on May 30, the Office of Thrift Supervision told Enstar it was in default under a 1988 capital maintenance agreement and demanded that Enstar immediately infuse into American Savings sufficient equity capital to cause American Savings to comply with its regulatory capital requirements.

Enstar owns 50 percent of American Savings' outstanding common stock, which is pledged to the thrift. American Savings said its capital plan had assumed, among other things, collection of all interest payments on amounts owed by Enstar to American Savings.

At year-end 1990, American Savings had $4.4-billion in assets and last year reported a negative 1.55 percent return on assets.

Enstar's bankruptcy means there will be no further resource of capital to troubled American Savings from its parent company, said Sam Beebe, analyst with Williams Securities. Enstar was formerly known as Kinder-Care Inc.