Attached files
| file | filename |
|---|---|
| 8-K - ORLEANS HOMEBUILDERS INC | v181518_8k.htm |
| EX-99.1 - ORLEANS HOMEBUILDERS INC | v181518_ex99-1.htm |
| EX-10.1 - ORLEANS HOMEBUILDERS INC | v181518_ex10-1.htm |
Exhibit
99.2
|
Contact:
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The
Abernathy MacGregor Group, Inc.
|
|
Dan
Hilley, dch@abmac.com
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|
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(213)
630-6550
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FOR IMMEDIATE
RELEASE
ORLEANS
HOMEBUILDERS ANNOUNCES EXECUTION OF
DEFINITIVE
‘STALKING HORSE’ ASSET PURCHASE
AGREEMENT
WITH NVR, INC.
Bensalem, Pa., April 14, 2010 — Orleans Homebuilders,
Inc. (OHBIQ.PK) (“Orleans” or the “Company”), which develops, builds and markets
high-quality single-family homes and townhouses and whose operations in
Pennsylvania and New Jersey date back more than 90 years, announced that its
Board of Directors has approved, and yesterday, the Company executed an asset
purchase agreement (“APA”) with NVR, Inc. (“NVR” or the “Purchaser”) for an
initial “stalking horse bid” for substantially all of the assets of the
Company. The Company confirmed that it has received the cash deposit
required under the APA. The Company also filed a motion with the U.S.
Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) seeking
orders to approve the APA as well as the auction and bidding procedures
described herein.
Under the
APA, NVR would acquire substantially all of the Company’s land, work-in-process
home construction and intangible assets for communities in each of the Company’s
existing regions for an aggregate purchase price of $170.0 million, subject to
certain working capital and other adjustments, as noted below.
More
specifically, the APA provides for the acquisition of substantially all of the
Company’s assets, including land, lots, work-in-process units under construction
(spec homes, models, backlog homes and backlog contracts) at substantially all
of the Company’s currently active and future communities, plus acquisition of
the Company’s interests in joint ventures and other controlled interests in
land, customer deposits, trademarks, and intangible assets (collectively, the
“Acquired Communities” or the “Acquired Assets”). Under the APA, NVR
will also assume certain specific liabilities, including the assumption or
replacement of an aggregate of approximately $52.6 million of bank letters of
credit and external surety and other performance bonds related specifically to
the Acquired Communities.
The APA
specifically excludes the Company’s two communities in New York State, which are
anticipated to be sold separately by the Company and which represent
approximately 200 lots and work-in-process units of the Company’s total
approximately 4,300 lots and work-in-process units. The assets to be
sold under the APA generally also do not include the Company’s community
property management subsidiary; the Company’s mortgage broker affiliate; income
tax refunds and other cash balances; or the cash surrender value of the
Company’s corporate-owned life insurance policies.
The APA
also provides for the continued construction and closings of all homes currently
under construction in the Acquired Communities. The Company and NVR
currently intend to honor the backlog contracts on homes under construction with
homebuyers throughout the process, including escrowed customer
deposits. Building will continue on homes under construction in all
communities in the Company’s 11 divisions in eight states, including on homes
under construction in the New York communities not included in the APA, as well
as the closing of home deliveries in all communities.
Page
1
“This
sale agreement fulfills the commitment we made at the outset of the Chapter 11
case to pursue potential purchasers of the Company,” stated Garry P. Herdler,
Executive Vice President and Chief Financial Officer of Orleans. “With the Court
process, our M&A advisors and Phoenix Group encouraging other better and
higher bids to emerge, the sale should culminate in a competitive auction to be
held within a reasonable near-term timeframe that will allow us to provide some
definitive resolution for customers, vendors and employees alike.”
The
$170.0 million purchase price under the APA is subject to certain defined
working capital adjustments, which could be material, due primarily to home
settlements and ongoing construction expenditures prior to
closing. The working capital adjustments generally include reductions
in the purchase price for the settlement of home closings that occur on or after
March 1, 2010 and before the closing date of the APA, for certain reductions in
the contract price for cancelled backlog units and for the sale of other spec
and model home units at discounts above certain amounts, and certain other
reductions. These working capital adjustments also generally include increases
in the purchase price for home construction and certain other expenditures
incurred on work-in-process units on or after March 1, 2010 and before the
closing date.
The
Company had previously announced the execution of a non-binding letter of intent
relating to the sale of the Company; however, the Company was unable to complete
the sale prior to the Chapter 11 filing on March 1, 2010. This non-binding
letter of intent was not with NVR.
The
Company recently received a federal income tax refund of approximately $18.2
million related to the federal income tax return in respect of 2008, filed on
December 18, 2009, which was as a result of the passing of government’s
five-year tax loss carry back provision in late calendar 2009. This refund was
paid to lenders pursuant to the terms of the credit agreement. The
Company also announced that it intends to immediately file an amended 2008
federal tax return, which would entitle it to receive an additional federal
income tax refund of approximately $3.5 million. There can be no
assurance as to the amount or timing of receipt of any such refund.
Overview
of Planned Bid Procedures, Sale Motion and APA Closing Conditions
The bid
procedures and sale motion are subject to the approval of the Bankruptcy Court,
with the hearing currently anticipated to be on May 4, 2010.
The
Company and its mergers and acquisitions investment banker, BMO Capital Markets
Corp., and its homebuilding mergers and acquisitions consultant, Lieutenant
Island Partners LLC, are continuing to conduct an on-going auction process with
other potentially interested bidding parties. The Company’s
newly-appointed Chief Restructuring Officer, with the assistance of PMCM, LLC,
an affiliate of Phoenix Management Services, Inc., are coordinating ongoing
Company sale efforts.
Under the
sale motion filed by the Company, preliminary competing bids and corresponding
cash deposits would be due by 12:00 noon on June 16, 2010 to be considered as a
“qualifying bidder.” All qualifying bidders will be invited to an
anticipated court auction on June 23, 2010. Court approval of the
auction results is tentatively scheduled for June 24, 2010, with closing of the
sale on approximately June 29, 2010. The APA and the Company’s proposed
debtor-in-possession bank facility each contain certain provisions to extend
these dates.
Page
2
These bid
procedures also generally require that a qualifying bidder must bid at least
$178.0 million (on a comparable basis to the Asset Purchase Agreement) to be
considered a “qualified bid” (without any conditions for due diligence or for
financing), which is the aggregate of the existing purchase price under the APA,
plus an aggregate of $4.4 million for a break-up fee and certain out-of-pocket
expenses for NVR, plus an incremental bid on the Acquired Assets of $3.6
million. Subsequent incremental bids above $178.0 million by
qualified bidders at the auction will be in increments of $1.0 million for the
Acquired Assets.
The APA
is subject to various customary closing conditions but is specifically not
subject to any additional due diligence on the assets, liabilities and financial
condition of the Company, including no further due diligence on the budgets for
home construction, community site improvements, contingencies, overhead, unit
counts, backlog and or on the anticipated material inventory impairments and
other accruals related to fiscal periods after June 30, 2009 as well as to the
restructuring, the Chapter 11 process, and this APA.
About
Orleans Homebuilders, Inc.
Orleans
Homebuilders, Inc. develops, builds and markets high-quality single-family
homes, townhouses and condominiums. From its headquarters in suburban
Philadelphia, 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 11 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. Orleans Homebuilders currently
employs approximately 225 people.
About
NVR, Inc.
NVR, Inc.
is one of the nation’s largest homebuilding and mortgage banking
companies.
Page
3
Forward-Looking
Statements
Certain
information included herein and in other Company statements, reports and SEC
filings is or may be forward-looking within the meaning of the Private
Securities Litigation Reform Act of 1995, including, but not limited to,
statements concerning the ability of the Company to enter into new financing
arrangements, including without limitation debtor-in-possession financing; the
ability to consummate a sale of the Company’s assets; required bankruptcy court
approvals for, among other things, the APA; participation of other bidders in
the auction process; the ability of the auction process to provide some
definitive resolution for customers, vendors and employees alike; anticipated
auction and closing dates; adjustments to the purchase price in the APA as a
result of working capital adjustments; the Company’s anticipated sale of assets
that are not subject to the APA; the satisfaction of the APA’s closing
conditions; the continued construction of homes, home closings and the honoring
of customer deposits; and the anticipated income tax refunds. 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 the Company’s ability to
enter into debtor-in-possession financing facility and to operate under terms of
such financing; the Company’s ability to obtain court approval for the APA, bid
procedures and related matters; the Company’s ability to obtain court approval
of its financing arrangements and with respect to other motions relating to the
bankruptcy filings; the ability of the Company to satisfy the closing conditions
in the APA; the ability of the Company to obtain anticipated tax refunds; the
results of the auction process; the ability of the Company to develop, confirm
and consummate one or more plans of reorganization with respect to the Chapter
11 proceeding; the ability of the Company to obtain and maintain normal terms
with vendors and service providers and to maintain contracts critical to its
operations; the ability of the Company to continue to attract buyers of its
homes; the ability to continue normal business operations; the potential adverse
impact of the Chapter 11 proceedings; the ability of the Company to attract,
motivate and/or retain key executives and employees; access to liquidity; 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; the ability to engage in a financing or strategic transaction; the
availability and cost of labor and materials; our dependence on certain key
employees; whether the Company will be able to provide any value to the
Company’s unsecured creditors or its equity holders; and weather 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, 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, December 23, 2009, February 1, 2010,
February 19, 2010, March 3, 2010, March 11, 2010 and March 22,
2010.
# # #
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