Comstock Homebuilding Executes Loan Modification With Keybank to Provide Improved Operating Cashflow and Completes Its Effort to
November 02 2009 - 2:42PM
Marketwired
Comstock Homebuilding Companies, Inc. (NASDAQ: CHCI) today
announced that it and certain of its subsidiaries (collectively
"Comstock" or the "Company") entered into a loan modification with
Keybank National Association ("Keybank"), completing its efforts to
modify all of the secured loans that the Company has guaranteed.
The loan modification amends an existing loan with a $22.8 million
outstanding principal balance secured by the Company's Eclipse
condominium project and the Company's planned Station View
townhouse project (the "Loan") in a manner that will immediately
provide Comstock with improved operating cashflow from sales at the
two properties.
The key terms of the modification increase the cash flow
available to Comstock through reduced principal payments required
by Keybank as condominium units are settled at the Eclipse project
and through the sale of the Station View project land. The
modification reduces the curtailment requirement from 100% of net
proceeds to 85% of the net sales price of Eclipse condominium
units, providing Comstock with cash equal to 15% of the net sales
price as each condominium unit is delivered. The loan modification
will be applied retroactively to all settlements occurring on or
after July 1, 2009, resulting in an immediate cash infusion to
Comstock.
The modification allows for continued receipt by Comstock of 15%
of the net sales price of Eclipse condominium units provided
Comstock satisfies certain conditions subsequent; including meeting
a minimum sales requirement of nine (9) units per quarter on a
cumulative basis, and satisfying certain other conditions with
respect to certain outstanding unsecured indebtedness of the
Company (the "Modification Covenants"). It shall not be deemed a
default under the loan should Comstock fail to meet the
Modification Covenants but may result in a reversion to the unit
release provisions as previously set forth in the existing loan
documents.
Recent sales at the Eclipse project have been sufficient to
position the Company to meet the Modification Covenants with
respect to unit sales through Q4 2009. The Company also has entered
into a contingent contract covering the sale of the Station View
land and expects that, provided the conditions of sale are met, the
sale will be consummated in the first quarter of 2010. The Company
continues to work diligently on satisfying the Modification
Covenants related to the Company's unsecured indebtedness.
The Modification also reduces the curtailment requirement
applicable to the Station View project; providing for the payment
of certain outstanding unsecured debts of the Company from the sale
proceeds generated through the sale of the Station View land and
thereafter reducing the curtailment requirement from 100% to 85% of
the net sales price generated through the pending sale of the
Station View project land, subject to a minimum release price to be
paid to the Lender.
In exchange for the modified terms, Comstock agreed to adjust
the interest rate to the higher of LIBOR plus 5.0% or the prime
rate plus 2.0% subject to a LIBOR floor of 2.0%. The interest
reserve provision of the loan was maintained providing Comstock a
means for payment of debt service on the loan as modified without
requiring operating cashflow to cover interest expenses.
"The agreement reached with Keybank provides us with an
immediate cash infusion and gets us very close to completing our
plan for stabilizing Comstock," said Christopher Clemente,
Comstock's Chairman and Chief Executive Officer. "Sales at the
Eclipse project have improved this year, giving us reason to
believe that the terms of this loan amendment will facilitate
ongoing enhanced cashflow from operations. This will help
tremendously in our effort to position Comstock to rebuild
shareholder value. We expect to report results for the third
quarter on or before November 16, 2009, at which time we believe we
will meet the shareholder equity listing requirement applicable to
the Nasdaq Capital Markets. These recent accomplishments and
continuing signs that the market downturn is easing in the
Washington, D.C. metropolitan area gives us reason to once again be
optimistic about our future."
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 a variety of for-sale residential products. The company
currently actively markets its products under the Comstock Homes
brand in the Washington, D.C. and Raleigh, N.C. 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. 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. 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 31, 2009. 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: Jeff Dauer 703.883.1700
Comstock Holding Companies (NASDAQ:CHCI)
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