H&R Block, the largest U.S. tax preparer, said today it tapped $250 million from a couple of credit lines, citing a deterioration in the market for commercial paper — short-term debt issued by companies or banks.
The company, which owns subprime lender Option One Mortgage in Irvine, borrowed the money under the name Block Financial Corp., it said in a filing.
The tax preparer also said in a release that last week it fired its auditor KPMG LLP. The move is tied to new board member Edward Shaw, one of three dissidents elected to the board on Sept. 6. Here’s what Block says:
Mr. Breeden serves as the monitor of KPMG under its deferred prosecution agreement with the Department of Justice and Mr. Shaw is also engaged in the monitorship.
The audit committee, consistent with the advice of KPMG, determined that, as a result of this relationship, the participation of the new directors either as members of the audit committee or in a manner that would be equivalent to being audit committee members, would impair KPMG’s independence.
By the way, H&R Block is still trying to sell Option One, the money-losing subprime unit that left the company vulnerable to attack by dissident investors.
H&R previously said it’s trying to work out a new deal to sell Option One to private investor Cerberus Capital Management, but the deal is in question. Option One is in violation of certain aspects of the sale agreement.
Last month Cerberus stuck its current subprime and Alt-A unit, Aegis Mortgage Corp., in bankruptcy court and Aegis stopped funding new loans.
hahaha…i knew this was going to happen…H&R was never the best company to work for. No wonder i quit. The just try to make the deal withought spending the money to do it right. to much short cuts will take this company down
H&R Block Mtg/OOMC was a good company to work for. I learned a lot from that company. It’s too bad that they couldn’t hang on. We all knew it was coming and poor decision making on exceptions helped make that happen. Bid wigs were warned about loans that will end up not being sold. I wish the listened!