Comstock Homebuilding Companies, Inc. Retains FTI Consulting as Strategic and Financial Advisor
July 09 2008 - 4:20PM
Marketwired
RESTON, VA ("Comstock" or the "Company") today announced that it
has retained FTI Consulting, Inc. (NYSE: FCN) ("FTI") to act as an
advisor to the Company with respect to strategic and financial
alternatives in the face of a prolonged real estate downturn. FTI
has been engaged to work closely with the Company and its lenders
to evaluate operational and financial strategies intended to
enhance long term enterprise value.
The terms of the engagement letter that the Company entered into
on June 24, 2008 ("Engagement Letter") with FTI provided, among
other things, for Brad Foster of FTI to serve as the Company's
interim Chief Restructuring Officer. In his role as an officer of
the Company Mr. Foster will report directly to our Chief Executive
Officer. The Engagement Letter also provides for the services of
other temporary employees and advisors to support Mr. Foster in his
role.
In connection with the exploration of available debt
restructuring alternatives, the Company has elected to cease making
certain scheduled interest and/or principal curtailment payments
while it attempts to negotiate modifications or other satisfactory
resolutions from its lenders. The subject indebtedness represents a
significant number of the Company's projects. The failure to make
such interest and/or principal curtailment payments constitutes
breaches of the terms of the loan agreements, some of which have
reached maturity. If such breaches are not cured prior to the
expiration of any applicable grace periods and such matured loans
are not extended, then, under the terms of the loan agreements, the
lenders may be entitled to charge an increased, or default, rate of
interest and/or declare the principal amount to be immediately due
and payable in full. The Company anticipates that it may be forced
to cease making certain additional scheduled interest or principal
curtailment payments in the near future if meaningful concessions
are not derived in the on-going negotiations with its lenders.
The aggregate amount of the Company's and its affiliates'
outstanding indebtedness at June 30, 2008 was approximately $157
million, and it is anticipated that scheduled interest or principal
curtailment payments will be ceased with respect to up to $94
million of this indebtedness where sufficient interest reserves are
not currently in place.
About Comstock Homebuilding Companies, Inc.
Established in 1985, Comstock Homebuilding Companies, Inc. is a
publicly traded, diversified real estate development firm with a
focus on affordably priced for-sale residential products. Comstock
builds and markets single-family homes, townhouses, mid-rise
condominiums, high-rise condominiums, mixed-use urban communities
and active adult communities. The company currently markets its
products under the Comstock Homes brand in the Washington, D.C.;
Raleigh, North Carolina; and Atlanta, Georgia metropolitan areas.
Comstock Homebuilding Companies Inc. trades on Nasdaq under the
symbol CHCI. For more information on the Company or it projects
please visit www.comstockhomebuilding.com.
Cautionary Statement Regarding Forward-Looking Statements
This release contains "forward-looking" statements that are made
pursuant to the Safe Harbor provisions of the Private Securities
Litigation Reform Act of 1995. Statements that are predictive in
nature, that depend upon or refer to future events or conditions,
or that include words such as "may," "will," "expects," "projects,"
"anticipates," "estimates," "believes," "intends," "plans,"
"should," "seeks," and similar expressions, including statements
related to Comstock's expected future financial results and
anticipated growth in the Washington, D.C. housing market, are
forward-looking statements. Forward-looking statements involve
known and unknown risks and uncertainties that may cause actual
future results to differ materially from those projected or
contemplated in the forward-looking statements. These risks and
uncertainties include, but are not limited to, economic, market and
competitive conditions affecting Comstock and its operations and
products, risks and uncertainties relating to the market for real
estate generally and in the areas where Comstock has projects, the
availability and price of land suitable for development, materials
prices, labor costs, interest rates, Comstock's ability to service
its significant debt obligations, fluctuations in operating
results, anticipated growth strategies, continuing relationships
with affiliates, environmental factors, government regulations, the
impact of adverse weather conditions or natural disasters and acts
of war or terrorism. Additional information concerning these and
other important risks and uncertainties can be found under the
heading "Risk Factors" in the Company's most recent form 10-K, as
filed with the Securities and Exchange Commission on March 16,
2007. Comstock specifically disclaims any obligation to update or
revise any forward-looking statements, whether as a result of new
information, future developments or otherwise.
Contact: Bruce Labovitz Email Contact 703.230.1131
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