Phila. firm buying bond insurer's unit

Resource America Inc., the Philadelphia firm that says it wants to find a value in the ruins of the subprime credit collapse, is buying an asset-management business from a bond insurer that in December was downgraded to junk status by Standard & Poor's.

The insurer, ACA Capital Holdings Inc., of New York, which is in need of cash to unwind complex financial instruments linked to bonds, did not say in its announcement yesterday how much Resource America had agreed to pay for its separate business managing CLOs, or collateralized loan obligations.

The credit crisis "has created all kinds of folks in need of liquidity," said Paul Halpern, a partner in Versa Capital Management, in Philadelphia. The market for distressed assets has mostly been at a standstill because the "sellers were slower to adjust their expectations than the buyers."

The business had $1.81 billion under management at the end of September, according to ACA's lastest quarterly report.

Resource America did not return calls seeking comment. Its unit taking on the ACA operation, Resource Financial Fund Management, had $14.56 billion under management at the end of December, up from $11.76 billion the year before.

Resource America's shares closed yesterday at $12.55, down 21 cents, or 1.65 percent. A year ago, they were worth about $28.

ACA said privately held FSI Capital L.L.C., which has a venture with Resource America that packages bank and insurance-trust-preferred securities into another layer of complicated securities, is buying an additional ACA asset-management business that had $16.16 billion under management in September.

It was not clear if the existing relationship between Resource America and FSI had played a role in the two companies' deals with ACA.

It also was not clear if yesterday's deal was linked to Resource America's announcement Friday that it had taken an $18.3 million charge to write down the value of loans backing two of the collateralized debt obligations it manages.

Since the summer, Resource America has bought troubled mortgages and beefed up its leasing-asset-management business, and said last month that it was sponsoring a blank-check company to make acquisitions of private-equity and hedge-fund managers.