Sallie Mae Drops $900M Lawsuit

Move helps struggling student loan provider obtain $31B in financing
By Jim O'Neill,  Newser User
Posted Jan 29, 2008 9:31 AM CST
Student loan giant Sallie Mae has dropped its $900 million lawsuit against a New York investment firm.   (Getty Images)
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(Newser) – Beleaguered student loan provider Sallie Mae yesterday dropped its $900 million lawsuit against the onetime suitors who bailed on a $25.3 billion buyout after the credit crunch caused would-be investors to walk away, reports the Washington Post. By agreeing not to seek the penalty from investment firm JC Flowers and several partners, Sallie Mae secured $31 billion in financing.

In April, Flowers, Bank of America and JP Morgan negotiated to buy Sallie Mae for $60 a share, a premium of nearly 50%. The summer’s subprime crisis prompted the buyers to renege, sending Sallie Mae’s shares into freefall and setting off a bitter personal battle between Sallie Mae CEO Albert Lord and billionaire investor Christopher Flowers.