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Originally published October 5, 2009 at 6:49 AM | Page modified October 5, 2009 at 12:35 PM

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Frontier Financial's acquisition is called off

Frontier Financial and the New York company that agreed to acquire it, SP Acquisition Holdings, today called off the deal after concluding the deal couldn't be finished by their October 10 deadline.

Frontier Financial and the New York company that agreed to acquire it, SP Acquisition Holdings, today called off the deal after concluding the deal couldn't be finished by their October 10 deadline.

The acquisition's collapse leaves the battered parent of Everett-based Frontier Bank without a financial lifeline. Its shares fell 27 percent to 69 cents in the first few minutes of trading Monday.

The acquisition, announced July 31, was expected to close by Saturday.

But Pat Fahey, chairman and chief executive officer of Frontier, said in a statement Monday morning that "After working diligently for several months, the parties could not secure the required regulatory approvals in sufficient time to complete the transaction by the October 10, 2009 deadline. We will continue to aggressively work to resolve our loan problems, and shore up our capital position."

Both companies canceled shareholder meetings scheduled for Thursday to vote on the combination.

SP Acquisition, an offshoot of hedge fund Steel Partners, had planned to acquire Frontier Financial for $24.4 million in stock and warrants, salvaging the bank after it saw hundreds of millions of dollars in construction and development loans go sour.

The deal would have given Frontier Bank access to the $427 million in SP Acquisition's cash hoard.

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