Attached files
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| EX-10.1 - ORLEANS HOMEBUILDERS INC | v169471_ex10-1.htm |
| EX-99.1 - ORLEANS HOMEBUILDERS INC | v169471_ex99-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of
report (Date of earliest event reported): December 18, 2009
Orleans Homebuilders, Inc.
(Exact
Name of Registrant as Specified in Charter)
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Delaware
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1-6830
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59-0874323
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(State
or Other Jurisdiction
of
Incorporation)
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(Commission
File
Number)
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(IRS
Employer
Identification
No.)
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3333
Street Road, Suite 101, Bensalem, PA
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19020
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(Address
of Principal Executive Offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: (215) 245-7500
Not
Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see
General Instruction A.2. below):
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
1.01 Entry into a Material Definitive Agreement.
On
December 18, Orleans Homebuilders, Inc. (the “Company”) entered
into a second limited waiver and amendment extension letter (the
“Second Amendment Extension Letter”) with Wachovia Bank, National Association,
as agent (the “Agent”), in connection with the Company’s Second Amended and
Restated Revolving Credit Loan Agreement by and among the Company, its wholly
owned subsidiary, Greenwood Financial, Inc., certain affiliates of
Greenwood Financial, Inc., the Agent, and various other lenders
dated as of September 30, 2008 (as amended to date, the “Credit
Facility”). Subject to certain conditions, the Second Amendment
Extension Letter effectively extends through January 29, 2010 (subject to
earlier termination and the ability of Agent to extend the period of
effectiveness through February 12, 2010, provided that certain conditions
described below are satisfied) certain amendments to the Credit Facility made by
the Second Amendment to the Credit Facility and continued by the Third Amendment
to the Credit Facility and the limited waiver and amendment extension letter
dated November 4, 2009 (the “Amendment Extension Letter”). In
addition, the Second Amendment Extension Letter continues the temporary waiver
of compliance with certain covenants set forth in the Credit Facility and
temporarily waives compliance with certain other additional covenants set forth
in the Credit Facility. The Second Amendment Extension Letter was
effective on December 18, 2009. The summary of the material terms of
the Second Amendment Extension Letter set forth below is qualified in its
entirety by reference to the text of the Second Amendment Extension Letter, a
copy of which is attached hereto as Exhibit 10.1.
Through
January 29, 2010 and subject to the expiration of the waiver and extension
period upon the occurrence of events specified in the Second Amendment Extension
Letter as described below, (i) the Agent and the lenders continued
their temporary waiver of the “Anticipated Events of Default” described in the
Amendment Extension Letter, and (ii) temporarily waived the additional events of
default that have occurred or are anticipated to occur under the Credit Facility
as a result of or relating to:
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·
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Failure
of the Company and the borrowers under the Credit Facility (collectively,
the “Obligors”) to repay all obligations under the Credit Facility and
cash collateralize the issuer’s maximum liability under each letter of
credit outstanding under the Credit Facility on the December 20, 2009
maturity date;
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·
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Failure
of the Obligors to pay the second additional fee as required by the Credit
Facility (estimated to be approximately $1.4 million on December 20, 2009
(the “Second Additional Fee”));
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·
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OHI
Financing, Inc.’s failure and anticipated failure to make interest
payments under (i) the junior subordinated notes issued in August 2009 in
exchange for certain outstanding trust preferred securities (the “Junior
Subordinated Notes”), including $235,000 due on January 30, 2010; and (ii)
the 8.52% junior subordinated notes underlying the $30 million issue of
trust preferred securities, including $639,000 due on each
of September 30, 2009 and December 30,
2009;
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·
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The
insolvency of the Obligors and the inability of the Obligors to pay their
debts as they mature.
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Initially,
the extension period during which the limited waiver is effective runs through
January 29, 2010. The waiver and extension period may, however, be
extended through February 12, 2010 by the Agent if the Agent and the Company
have satisfactorily documented the terms for amending and restating the Credit
Facility in accordance with the terms upon which Agent and the other lenders
would consider amending and restating the Credit Facility (the “Amendment
Terms”), and no event of default has occurred under the Credit Facility (other
than those waived in the Second Amendment Extension Letter).
The
waiver and amendment extension period under the Second Amendment Extension
Letter will, however, end immediately if:
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·
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A
creditor of any Obligor exercises or commences any enforcement action
against any Obligor (including without limitation, the acceleration of any
OHI Financing subordinated debt as a result of OHI Financing, Inc.’s
failure to make interest payments or any other default under the OHI
subordinated debt);
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2
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·
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One
or more of the Lenders notifies the Agent that it is unwilling or unable
to consent to the Amendment Terms and, in the reasonable judgment of the
Agent, the Obligors and Lenders will be unable to reach a mutual agreement
within a reasonable period of time;
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·
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The
Company or any of its affiliates make any bonus payments, incentive
payments or any similar payment to any officer, director, employee or
affiliates (other than commission or construction bonus payments to field
personnel in the ordinary course of business) during the waiver and
amendment extension period;
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·
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A
notice of borrowing for general working capital and corporate purposes
fails to provide sufficient detail of the intended use of the advance (or
the use is not deemed satisfactory to the Agent, but the payment is made
over the Agent’s objection);
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·
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The Obligors fail to
deliver financial statements to the Agent on the next business day after
they are filed with the Securities and Exchange
Commission;
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·
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The
Obligors fail to deliver to the Agent any and all offers made to purchase
the Obligors or their assets outside the ordinary course of
business;
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·
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Any
Obligor commence construction on any residential housing units for which
there is not a qualifying agreement of sale without prior written consent
of the Agent;
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·
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There
is a purchase of any real estate by any Obligor without the prior written
consent of the Agent;
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·
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The
Company and its subsidiaries fail to keep all deposit accounts and
securities accounts subject to a security interest and control
agreements in favor of the Agent, with certain exceptions, including an
exception for certain accounts restricted from being pledged due to legal
or regulatory restrictions, and certain other accounts holding funds not
in excess of $7.5 million (the “Excluded
Accounts”);
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·
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Obligors
fail to deliver the report which lists the balances of cash and cash
equivalents on a consolidated basis, including cash and cash equivalents
in all Excluded Accounts, for each day of the previous week as required by
the terms of the Credit Facility;
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·
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The
Company holds and/or owns cash and cash equivalents determined on a
consolidated basis in the amount in excess of $12,000,000 with respect to
unrestricted cash and cash equivalents, provided that the Company may hold
and/or own cash and cash equivalents in excess of $12,000,000 for no
longer than two (2) consecutive business days so long as the excess is
used to repay loans or otherwise reduce such cash amounts in accordance
with the Credit Facility;
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·
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The
Obligors file an amendment to any federal tax return claiming a tax refund
with respect to the current net operating loss carry back law without
concurrently filing any forms required by the Agent so the proceeds will
be delivered directly to the Agent (in connection with its security
interest in such federal tax refund);
or
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·
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The occurrence of any
event of default under the Credit Facility or the other loan documents,
except those events of defaults waived under the Limited Waiver and
Amendment Extension Letter.
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Upon the
termination of the waiver and extension period, the events of default described
above will immediately constitute events of default under the Credit Facility
with no further notice and the Agent and the lenders will be able to exercise
all of their rights and remedies under the Credit Facility and under applicable
law.
3
During
the waiver and extension period, the borrowing base and the borrowing base
availability calculations relating to borrowing base certificates delivered on
or after October 30, 2009 will be made using the modifications to the
definition of “Borrowing Base Availability” and to Article III of the Credit
Facility (Notice of Borrowing; Borrowing Base and Borrowing Base Availability)
in the Third Amendment to the Credit Facility, notwithstanding that such
modifications, by their terms, are otherwise no longer effective. As a
result, the liquidity enhancements contained in the Second Amendment and Third
Amendment to the Credit Facility will generally continue to be effective during
the waiver and extension period. However, during the waiver and
extension period, the borrowing base availability will be reduced
dollar-for-dollar by the aggregate liability relating to any letter of credit or
tri-party agreement issued pursuant to the Credit Facility for which a draw
request has been made (but not yet paid), in addition to amounts actually drawn
under any such letter of credit or tri-party agreement.
Pursuant
to the Second Amendment Extension Letter, the Agent, the Issuer and the Lenders
have agreed that letters of credit issued under the Credit Facility may be
extended to February 26, 2010 pursuant to the terms of the Credit Facility,
except that no cash collateral is required to be posted. Furthermore,
Lenders will continue to extend to the Borrowers the Line of Credit after the
Credit Facility maturity date and during the waiver and amendment extension
period as if the Credit Facility maturity date was so extended, subject to the
terms of the Credit Facility and the Second Amendment Extension
Letter.
Notwithstanding
the limited waiver and amendment extension, under the Second Amendment Extension
Letter, the First Additional Fee of approximately $13.7 million was earned on
October 31, 2009 and the Second Additional Fee of approximately $1.4
million was earned on December 20, 2009. The Company does not have
sufficient liquidity available to pay these fees. The events of default
caused by the failure to pay the First Additional Fee and Second Additional Fee
are, however, waived during the waiver and amendment extension period, thereby
effectively deferring payment of the fees until termination of the waiver and
amendment extension period. Furthermore, solely for purposes of certain
certifications in any notice of borrowing relating to the tangible net worth
covenant in the Credit Facility, the Obligors may make the certifications
without giving effect to the accrual of the First Additional Fee and Second
Additional Fee.
As
previously announced by the Company on December 8, 2009, the Company agreed to a
non-binding term sheet relating to a maturity extension and significant
structural modification of the Credit Facility, and currently expects that it
and its Lenders will enter into an amended and restated credit facility (the
“Amended and Restated Credit Facility”) on or before January 29, 2010, or
thereabouts, although the Company can offer no assurance that it will be able to
do so. The Company believes that the Amended and Restated Credit
Facility, if completed in accordance with the non-binding term sheet, should
provide the Company with adequate liquidity to continue its operations in the
near term, including potentially for up to the next 12 to 18
months. Any Amended and Restated Credit Facility will be subject to
an affirmative vote by each of the approximately 16 lenders party to the Credit
Facility and the Company can offer no assurances that each of the lenders will
approve the Amended and Restated Credit Facility or as to specific
terms of any document that may be approved. The Company anticipates
that even if it successfully enters into the Amended and Restated
Credit Facility, without either a refinancing, recapitalization or outright
Company sale within approximately 12 months from closing the Amended
and Restated Credit Facility in accordance with the non-binding term sheet, or
further modifications to the Amended and Restated Credit Facility as
contemplated, the Company would be unlikely to have sufficient liquidity to
continue its normal operations for an extended period thereafter.
The
Company anticipates that without the effectiveness of the Amended and
Restated Credit Facility: (i) the Credit Facility will otherwise effectively
mature on approximately January 29, 2010 as a result of the expiration of the
extension period under the Second Amendment Extension Letter (subject to earlier
termination and the ability of Agent to extend the period of effectiveness
through February 12, 2010 as discussed above); (ii) the Company will likely not
have sufficient liquidity to continue its normal operations at or before that
time; and (iii) without an additional temporary amendment on or before January
15, 2010, the due date of the Company’s borrowing base certificate as of
December 31, 2009, or within approximately one week thereafter, the Company will
likely experience liquidity problems due to borrowing base limitations or
covenant or other defaults under the Credit Facility on or before January 15,
2010. In addition, in the event that, at any time, a beneficiary of a
letter of credit issued under the Credit Facility draws under the letter of
credit issued to it, any such draw will have an adverse effect on the Company’s
ability to borrow under the Credit Facility and draws of any significant amount
of letters of credit will materially adversely affect the Company’s liquidity
and ability to continue its operations. For additional discussion of
the Company’s liquidity, please refer to the Liquidity and Capital Resources
section of the Company’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2009 filed with the Securities and Exchange Commission on May 15,
2009, as well as the Current Reports on Form 8-K and press releases filed with
the Securities and Exchange Commission on August 14, 2009, October 6, 2009,
November 5, 2009, December 9, 2009 and December 18, 2009, the Company’s Form
12b-25 related to Form 10-K filed with the Securities and Exchange Commission on
September 29, 2009, and the Company’s Form 12b-25 related to Form 10-Q filed
with the Securities and Exchange Commission on November 17, 2009.
4
On
December 18, 2009, the Company issued a press release announcing the Second
Amendment Extension Letter, a copy of which is furnished herewith as
Exhibit 99.1.
Item
2.04 Triggering Events That Accelerate or Increase a Direct Financial Obligation
or an Obligation under an Off-Balance Sheet Arrangement
Item 1.01
is incorporated herein by reference.
But for
the Second Amendment Extension Letter, the occurrence of one of more of the
anticipated events of default described above would allow the lenders to
exercise all of their remedies under the Credit Facility, including accelerating
payment of the entire amount outstanding under the Credit Facility. As of
December 21, 2009, there is approximately $317.9 million outstanding under the
Credit Facility. After giving effect to the first Amendment Extension
letter, the earliest date on which any of the anticipated events of default
under the Credit Facility described above would have occurred is December 20,
2009.
Item
8.01. Other Events.
On
December 18, 2009 the Company issued a press release announcing receipt of a
letter from the NYSE Amex LLC, a copy of which is furnished herewith as
Exhibit 99.1.
Cautionary Statement for
Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation
Reform Act of 1995
Certain
information included herein and in other Company statements, reports and SEC
filings is forward-looking within the meaning of the Private Securities
Litigation Reform Act of 1995, including, but not limited to, statements
concerning anticipated or expected financing arrangements; including the terms
of and timing of entry into further amendments to the Second Amendment Extension
Letter or the anticipated Amended and Restated
Credit Facility; payments on its 8.52% Trust Preferred Securities and the Junior
Subordinated Notes; anticipated tax refunds and the timing of receipt of any
refund; potential strategic transactions, including refinancing,
recapitalization and sale transactions involving the Company; anticipated and
potential asset sales; anticipated liquidity; anticipated increase in net new
orders, conditions in or recovery of the housing market, and economic
conditions; the Company's long-term opportunities; the timing of future filings
by the Company of its Annual and Quarterly Reports and the continued listing of
the Company's common stock on the Exchange; continuing overall economic
conditions and conditions in the housing and mortgage markets and industry
outlook; anticipated or expected operating results, revenues, sales, net new
orders, backlog, pace of sales, spec unit levels, and traffic; future or
expected liquidity, financial resources, debt or equity financings, amendments
to or extensions of our existing revolving Credit Facility; strategic
transactions and alternatives; the anticipated impact of bank reappraisals;
future impairment charges; future tax valuation allowance and its value;
anticipated or possible federal and state stimulus plans or other possible
future government support for the housing and financial services industries;
anticipated cash flow from operations; reductions in land expenditures; the
Company's ability to meet its internal financial objectives or projections, and
debt covenants; the
5
Company's
future liquidity, capital structure and finances; the Company's response to
market conditions; and the Company's response to the Exchange's notice
concerning listing requirements. Such forward-looking information involves
important risks and uncertainties that could significantly affect actual results
and cause them to differ materially from expectations expressed herein and in
other Company statements, reports and SEC filings. These risks and
uncertainties include our ability to amend and extend the Credit Facility; our
ability to remain in compliance with the terms of the Credit Facility, including
any Amended and Restated Credit Facility; local, regional and national economic
conditions; the effects of governmental regulation; the competitive environment
in which the Company operates; fluctuations in interest rates; changes in home
prices; the availability of capital; our ability to engage in a financing or
strategic transaction; the availability and cost of labor and materials; our
dependence on certain key employees; and weather conditions. In addition,
there can be no assurance that the Company will be able to obtain any Amendment
to or extension of its existing revolving Credit Facility or other alternative
financing or adjust successfully to current market conditions. Additional
information concerning factors the Company believes could cause its actual
results to differ materially from expected results is contained in Item 1A of
the Company's Annual Report on Form 10-K/A for the fiscal year ended June 30,
2008 filed with the SEC and subsequently filed Quarterly Reports on Form
10-Q.
Item
9.01 Financial Statements and Exhibits.
(d)
Exhibits
The
following exhibits are filed or furnished with this Current Report on
Form 8-K:
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Exhibit No.
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Description
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10.1
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Second
Limited Waiver and Amendment Extension Letter, dated as of December 18,
2009, by and among Greenwood Financial, Inc. and certain affiliates,
Orleans Homebuilders, Inc., Wachovia Bank, National Association and
various other lenders party thereto (filed herewith).
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99.1
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Press
release of Orleans Homebuilders, Inc. dated December 18, 2009
(furnished herewith).
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6
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Dated:
December 23, 2009
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Orleans
Homebuilders, Inc.
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By:
Garry P.
Herdler
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Name:
Garry P. Herdler
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Title:
Executive Vice President,
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Chief
Financial Officer and
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Principal
Financial Officer
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7
EXHIBIT
INDEX
The
following exhibits are filed or furnished with this Current Report on
Form 8-K:
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Exhibit No.
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Description
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10.1
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Second
Limited Waiver and Amendment Extension Letter, dated as of December 18,
2009, by and among Greenwood Financial, Inc. and certain affiliates,
Orleans Homebuilders, Inc., Wachovia Bank, National Association and
various other lenders party thereto (filed herewith).
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99.1
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Press
release of Orleans Homebuilders, Inc. dated December 18, 2009
(furnished herewith).
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8