BENSALEM, Pa., Feb. 1 /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. 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.
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: December 31,
September 30, June 30, In millions 2009 2009 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:
December 31, September 30, June 30, In millions 2009 2009 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
http://www.orleanshomes.com/. 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. DATASOURCE:
Orleans Homebuilders, Inc. CONTACT: Garry P. Herdler - Executive
Vice President & Chief Financial Officer of Orleans
Homebuilders, Inc., +1-215-245-7500 Web Site:
http://www.orleanshomes.com/
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