Attached files
| file | filename |
|---|---|
| 8-K - ORLEANS HOMEBUILDERS INC | v172878_8k.htm |
| EX-10.1 - ORLEANS HOMEBUILDERS INC | v172878_ex10-1.htm |
Exhibit
99.1
NEWS
RELEASE
|
Contact:
|
Garry
P. Herdler – Executive Vice President & Chief Financial
Officer
|
|
Orleans
Homebuilders, Inc. (215) 245-7500
|
|
|
(www.orleanshomes.com)
|
For
Immediate Release:
Orleans
Homebuilders Announces Third Limited Waiver Letter
and
Limited Unaudited Financial Information
BENSALEM,
Pa., February 1, 2010 /PRNewswire-FirstCall/ -- Orleans Homebuilders, Inc. (the
“Company”) (Amex: OHB) announced that on January 25, 2010 the Company executed a
third limited waiver letter (the “Waiver Letter”) to its $375 million Second
Amended and Restated Revolving Credit Loan Agreement dated September 30, 2008
(as amended, the “Credit Facility”). This Waiver Letter effectively
amends the definition of “Borrowing Base Availability” to reflect the borrowing
base certificate filed on December 15, 2009 (as of November 30, 2009) throughout
the Third Limited Waiver Extension period. In addition, under
the terms of the Waiver Letter, the Credit Facility size was reduced from $375
million to $350 million, the maximum cash covenant was reduced from $12 million
to $10 million, and the lenders were granted a security interest in certain
additional collateral. Lenders holding approximately 68% of the
commitments under the Credit Facility approved the Waiver Letter. In addition,
on January 29, 2010, the waiver period provided for in the “Second Amendment
Extension Letter” dated December 18, 2009 was extended to February 12, 2010, but
such period remains subject to potential earlier termination as a result of
certain events.
The
Company continues to work actively with members of its bank lending group to
obtain a maturity extension to its Credit Facility. As previously
announced, on December 8, 2009, the Company and certain of its lenders agreed to
a non-binding term sheet (the “Term Sheet”) relating to a maturity extension and
structural modifications (the “Amendment”) of the Credit Facility.
The
Amendment generally contemplates significant structural and covenant changes to
the Credit Facility, including a maturity extension to December 2011; the
granting of additional collateral; certain material step-down requirements in
the size of the Credit Facility which principal step-downs are generally
coincidental with the required material land asset sales over the next six to 18
months, with the application of the net proceeds from the build-out and sale of
work-in-process housing units over the next approximately nine months in certain
of the communities that may be sold without the construction of new spec units
in these specific locations, and future federal tax refunds. The
anticipated asset sales may include substantially all of the Company’s
undeveloped land positions as well as certain other positions, which are to be
sold, over up to the next 18 months, but primarily over the next 12
months. The Amendment is also expected to prohibit future site improvement
expenditures related to these designated land positions; limit significantly the
acquisition of new lots and land; and enable completion of existing
work-in-process housing inventory units in many of such communities without new
spec unit starts in certain specific locations. It is anticipated that the
Amendment will also prohibit the construction of new work-in-process housing
units in all communities approximately six to eight months prior to the new
December 2011 maturity date. The Company currently expects that such asset
sales will result in material financial losses, both relative to book value
reflected on the March 31, 2009 Quarterly Report on Form 10-Q (the
latest financial statements that the Company has filed with the SEC) and to
existing bank borrowing base value, respectively, of such assets. The
Amendment provides for a potential significant principal reduction or debt
forgiveness by the lenders if the Company can either retire or refinance the
entire restructured Credit Facility, or if the Company can recapitalize or sell
the Company primarily within the next six to 12 months following the ultimate
closing date of the Amendment, although realization of any principal reduction
or debt forgiveness is subject to significant conditions, including recapture by
lenders, as to which the Company can offer no assurance of
satisfaction. The Company believes that the Amendment should provide
the Company with adequate liquidity to continue its operations in the near term,
but generally not beyond approximately six to 12 months beyond the closing date
of the facility under this Term Sheet, if any.
1
The
Company continues to pursue other strategic alternatives including a potential
sale or recapitalization of the Company, and has presented potential transaction
alternatives to its lending group. There can be no assurance that the Company
will be able to consummate any transaction on terms acceptable to it, and any
such transaction may provide little or no value for either the Company’s
unsecured creditors or equity holders, or may result in substantial dilution to
the Company’s equity holders.
The
Amendment, or any other modification of or accommodation under the Credit
Facility beyond February 12, 2010, will be subject to an affirmative vote by
each of the approximately 17 lenders party to the Credit Facility and the
Company can offer no assurances that each of the lenders will approve the
Amendment or any other modification of or accommodation, or as to the specific
terms of the documentation that may be approved. If the Company does
not enter into the Amendment or any other modification of or accommodation under
the Credit Facility on or before approximately February 12, 2010, or
thereabouts, the Credit Facility will mature on such date and the Company will
not have sufficient funds to repay amounts outstanding or continue normal
operations.
For
additional discussion of the Company’s liquidity, please refer to the “Liquidity
and Net Debt” section below, 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 23, 2009.
The
Company has not made the September 30, 2009 or December 30, 2009 interest
payments of $639,000 each on its $30 million of 8.52% Trust Preferred
Securities. Similarly, the Company did not make the $235,000 payment
due on January 30, 2010 under the Junior Subordinated Notes issued under the
exchange agreement completed on August 3, 2009 (the “TPS Exchange
Agreement”).
Financial
Highlights
The
Company also announced today limited unaudited financial information as
follows:
|
·
|
Total
residential revenue for the three months ending December 31, 2009 was
approximately $78.5 million (217 homes) as compared to approximately $87.8
million (199 homes) for the three months ending December 31, 2008, a
decrease of approximately 10.6% versus the prior year
period. For the six months ending December 31, 2009,
residential revenue was approximately $132.7 million (356 homes) as
compared to $176.4 million (399 homes) for the six months ending December
31, 2008.
|
|
·
|
Net
new orders for the three months ending December 31, 2009 were
approximately $59.1 million (162 homes) as compared to approximately $41.2
million (113 homes) for the three months ending December 31, 2008, an
increase of approximately 43.4% over the prior year period. For
the six months ending December 31, 2009, net new orders were approximately
$134.5 million (369 homes) as compared to $94.9 million (248 homes) for
the six months ending December 31,
2008.
|
|
·
|
The
backlog as of December 31, 2009 was approximately $148.8 million (353
homes) as compared to a backlog of $156.8 million (335 homes) at December
31, 2008, a decrease of 5.1% over the prior year
period.
|
|
·
|
For
the three months ending December 31, 2009, the Company’s cancellation rate
was approximately 23%, which is a decrease from the 31% rate for the three
months ending December 31, 2008. For the six months ending December
31, 2009, Company’s cancellation rate was approximately 20%, which is a
decrease from the 34% rate for six months ending December 31,
2008.
|
|
·
|
The
Company’s estimates that it will record inventory impairments of
approximately $75.0 million for its fourth fiscal quarter ended June 30,
2009, versus inventory impairments of $20.0 million as of the fiscal
quarter ended June 30, 2008. Further, as the attention of the
Company’s senior management has been focused on matters relating to its
Credit Facility, the Company has not yet been able to adequately review
the inventory impairment charges to be recorded for either the fiscal
quarter ending on either September 30, 2009 or on December 31,
2009.
|
2
Liquidity and Net Debt
The
Company defines liquidity as the sum of cash and cash equivalents, restricted
cash — due from title companies, marketable securities and net borrowing base
availability. The Company’s liquidity as of December 31, 2009,
September 30, 2009 and June 30, 2009 was as follows:
|
In
millions
|
December
31, 2009
|
September
30, 2009
|
June
30, 2009
|
|
Cash
and cash equivalents
|
$10.5
|
$11.3
|
$8.1
|
|
Marketable
securities
|
0.0
|
0.0
|
6.3
|
|
Restricted
cash – due from title companies
|
1.2
|
3.8
|
4.4
|
|
Net
borrowing base availability
|
5.7
|
1.6
|
(3.2)
|
|
Liquidity
|
$17.4
|
$16.7
|
$15.6
|
The
liquidity as of December 31, 2009 is pro forma for the Waiver Letter which
allows net borrowing base availability to be based on the November 30, 2009
borrowing base certificate filed on December 15, 2009.
The
Company defines “net debt” as total mortgage and other note obligations plus
subordinated notes less the aggregate of cash and cash equivalents, marketable
securities, restricted cash — due from title companies, but excluding restricted
cash — customer deposits. Including the approximately $1.8 million
non-cash impact of the below par optional redemption feature under the TPS
Exchange Agreement, the Company’s net debt as of December 31, 2009, September
30, 2009 and June 30, 2009 was approximately as follows:
|
In
millions
|
December
31, 2009
|
September
30, 2009
|
June
30, 2009
|
|
Mortgage
and other note obligations
|
$312.0
|
$331.6
|
$333.0
|
|
Subordinated
notes
|
102.1
|
107.6
|
105.0
|
|
Subtotal
– Total Debt
|
$414.1
|
$439.2
|
$438.0
|
|
Less:
cash and cash equivalents
|
10.5
|
11.3
|
8.1
|
|
Less:
marketable securities
|
0.0
|
0.0
|
6.3
|
|
Less:
restricted cash – due from title companies
|
1.2
|
3.8
|
4.4
|
|
Net
Debt
|
$402.4
|
$424.1
|
$419.2
|
About
Orleans Homebuilders, Inc.
Orleans
Homebuilders, Inc. develops, builds and markets high-quality single-family
homes, townhouses and condominiums. The Company serves a broad
customer base including first-time, move-up, luxury, empty nester and active
adult homebuyers. The Company currently operates in the following
eleven distinct markets: Southeastern Pennsylvania; Central and Southern New
Jersey; Orange County, New York; Charlotte, Raleigh and Greensboro, North
Carolina; Richmond and Tidewater, Virginia; Chicago, Illinois; and Orlando,
Florida. The Company’s Charlotte, North Carolina operations also
include adjacent counties in South Carolina. To learn more about
Orleans Homebuilders, please visit www.orleanshomes.com.
3
Forward-Looking
Statements
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 the Amendment; payments on its 8.52% Trust Preferred
Securities and the Junior Subordinated Notes; 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 NYSE Amex 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 Company’s future liquidity, capital
structure and finances; and the Company’s response to market
conditions. 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, if the Amendment is
entered into; 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.
4