UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date of
report (Date of earliest event reported): January 26, 2010
Orleans
Homebuilders, Inc.
(Exact
Name of Registrant as Specified in Charter)
Delaware
|
|
1-6830
|
|
59-0874323
|
|
(State
or Other Jurisdiction
of
Incorporation)
|
|
(Commission
File
Number)
|
|
(IRS
Employer
Identification
No.)
|
|
3333
Street Road, Suite 101, Bensalem, PA
|
|
19020
|
|
(Address
of Principal Executive Offices)
|
|
(Zip
Code)
|
|
|
|
|
|
Registrant’s
telephone number, including area code:
(215) 245-7500
Not
Applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (
see
General Instruction A.2. below):
o
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item
1.01 Entry into a Material Definitive Agreement.
On
January 25, 2010, Orleans Homebuilders, Inc. (the “Company”) executed a
third limited waiver letter (the “Waiver Letter”) in connection with the
Company’s Second Amended and Restated Revolving Credit Loan Agreement by and
among the Company, its wholly owned subsidiary, Greenwood Financial, Inc.
(“Greenwood”), certain affiliates of Greenwood Financial, Inc.
(collectively with the Company and Greenwood, the “Obligors”), the Agent, and
various other lenders dated as of September 30, 2008 (as amended to date,
the “Credit Facility”). Subject to certain conditions, the Waiver
Letter temporarily waives compliance with certain terms set forth in the Credit
Facility. Lenders holding approximately 68% of the commitments under
the Credit Facility approved the Waiver Letter. The summary of
the material terms of the Waiver Letter set forth below is qualified in its
entirety by reference to the text of the Waiver Letter, a copy of which is
attached hereto as Exhibit 10.1.
As
required under the Credit Facility, on January 15, 2010, the Company delivered
to Agent the Company’s borrowing base certificate, reflecting the borrowing base
under the Credit Facility as of December 31, 2009. The borrowing base
certificate indicated that the unpaid principal balance of the loans outstanding
under the Credit Facility exceeded the available borrowing
base. Pursuant to the terms of the Credit Facility, the borrowers
under the Credit Facility have five business days (that is, through January 25,
2010) to make a principal payment on account of the outstanding loans in an
amount sufficient to reduce the outstanding principal balance of the outstanding
loans to the available borrowing base. Failure to make the payment as
required would constitute an event of default under the Credit Facility (the
“Overadvance Event of Default”).
Pursuant
to the terms of the Waiver Letter, the Agent and lenders agreed to temporarily
waive the Overadvance Event of Default. Subject to earlier
termination as a result of certain events, the limited waiver is effective
through February 12, 2010.
The
waiver period under the Waiver Letter will, however, end immediately
if:
·
|
The
Company holds and/or owns cash and cash equivalents determined on a
consolidated basis in the amount in excess of $10 million (a $2 million
reduction from the previously permitted $12 million) with respect to
unrestricted cash and cash equivalents, provided that the Company may hold
and/or own cash and cash equivalents in excess of $10 million for no
longer than two consecutive business days so long as the excess is used to
repay loans or otherwise reduce such cash amounts in accordance with the
Credit Facility;
|
·
|
The
Obligors: (a) fail to file an amendment to any federal tax return claiming
an additional tax refund (currently anticipated to be approximately $4
million in addition to the previously claimed refund of approximately $18
million) with respect to the current net operating loss carryback law
within five business days after the earlier of (i) any Obligor receiving
the tax refund resulting from the amendment to Obligors’ federal tax
return filed on December 18, 2009, or (ii) the Agent receiving the tax
refund resulting from the amendment to the Obligors’ federal tax return
filed on December 18, 2009 and Greenwood receiving written notice thereof
from Agent; (b) fail to concurrently file any forms required by the Agent
so the proceeds from the refund will be delivered directly to the Agent
(in connection with its security interest in such federal tax refund); and
(c) fail to obtain prior written approval of the Agent of such filing and
forms; and
|
·
|
The occurrence of any
event of default under the Credit Facility or the other loan documents,
except the Overadvance Event of
Default.
|
Upon the
termination of the waiver period, the Overadvance Event of Default described
above will immediately constitute an event of default under the Credit Facility
with no further notice and the Agent and the lenders will be able to exercise
all of their rights and remedies under the Credit Facility and under applicable
law.
During
the waiver period, the borrowing base and the borrowing base availability
calculations will be determined on the basis of the borrowing base certificate
delivered on December 15, 2009 reflecting the borrowing base as of November 30,
2009 and will be made using the modifications to the definition of “Borrowing
Base Availability” and to Article III of the Credit Facility (Notice of
Borrowing; Borrowing Base and Borrowing Base Availability) in the Third
Amendment to the Credit Facility, notwithstanding that such modifications, by
their terms, are otherwise no longer effective (resulting in an increase in
borrowing base availability of approximately $10.7 million as compared to the
borrowing base availability determined on the basis of the borrowing base
certificate delivered on January 15, 2010, reflecting the borrowing base as of
December 31, 2009). However, during the waiver period, the borrowing base
availability will be reduced dollar-for-dollar by the aggregate liability
relating to any letter of credit or tri-party agreement issued pursuant to the
Credit Facility for which a draw request has been made (but not yet paid), in
addition to amounts actually drawn under any such letter of credit or tri-party
agreement. Absent the modification relating to letter of credit and
tri-party agreement draws, borrowing base availability would not be reduced
until the draw was actually paid.
The
Waiver Letter also provides that the facility amount and revolving sublimit
under the Credit Facility is permanently reduced to $350,000,000, with a
corresponding pro rata reduction of each lender’s commitment under the Credit
Facility. In addition, on or after January 25, 2010, (i) any tax
refund received by the Obligors or the Agent will be applied to the loans under
the Credit Facility, with a corresponding permanent reduction in the facility
amount and the revolving sublimit and a corresponding pro rata reduction of each
lender’s commitment under the Credit Facility, and (ii) the borrowing base
availability will be reduced dollar for dollar by the amount of any tax refund
received by the Obligors or the Agent that is applied as described above to
repay the loans.
During
the waiver period, borrowers are not permitted to make any borrowings under any
swing line loan and no new letters of credit or tri-party agreements will be
issued. In addition, no consent of the borrowers will be required for
any assignment of a loan made pursuant to Section 13.9.2 of the Credit Facility
(Assignments by Lenders), although the Agent shall provide prompt notice of such
assignment to the Company.
In
addition to the foregoing, in connection with the Waiver Letter, the Company
also granted to Agent, for the benefit of the lenders, a security interest in
certain Pinelands Development Certificates representing 14 rights and each of
the life insurance policies owned by the Company that were originally purchased
by the Company in connection with the Company’s Supplemental Employee Retirement
Plan.
As
previously announced by the Company on December 8, 2009, the Company agreed to a
non-binding term sheet relating to a maturity extension and structural
modification of the Credit Facility, and currently believes that it and its
lenders may enter into an amended and restated credit facility (the “Amended and
Restated Credit Facility”) on or before February 12, 2010, or thereabouts,
although the Company can offer no assurance that it will be able to do
so. The Company believes that the Amended and Restated Credit
Facility, if completed in accordance with the non-binding term sheet, should
provide the Company with adequate liquidity to continue its operations in the
near term, including potentially for up to six to 12 months.
Any
Amended and Restated Credit Facility, 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 Amended and Restated Credit Facility or any
modification or accommodation, or as to specific terms of any documentation that
may be approved.
The
Company anticipates that without the effectiveness of the Amended and Restated
Credit Facility, or some other modification of or accommodation under the Credit
Facility, before approximately February 12, 2009: (i) the Credit Facility will
otherwise effectively mature on approximately February 12, 2010 as a result of
the expiration of the extension period under the Waiver Letter and the Second
Amendment Extension Letter (subject to earlier termination); and (ii) the
Company will likely not have sufficient liquidity to continue its normal
operations at or before that time.
For
additional discussion of the Company’s liquidity, please refer to 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, December 23, 2009 and
today, the Company’s Form 12b-25 related to Form 10-K filed with the Securities
and Exchange Commission on September 29, 2009, and the Company’s Form 12b-25
related to Form 10-Q filed with the Securities and Exchange Commission on
November 17, 2009.
On
January 29, 2010, the Company issued a press release announcing the Waiver
Letter, a copy of which is furnished herewith as Exhibit 99.1.
Cautionary Statement for
Purposes of the “Safe Harbor” Provisions of the Private Securities Litigation
Reform Act of 1995
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 anticipated Amended and Restated
Credit Facility; 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 Amended and
Restated Credit Facility 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.
Item
2.04 Triggering Events That Accelerate or Increase a Direct Financial Obligation
or an Obligation under an Off-Balance Sheet Arrangement
Item 1.01
is incorporated herein by reference.
But for
the Waiver Letter, the occurrence of the Overadvance Event of Default described
above would have allowed the lenders to exercise all of their remedies under the
Credit Facility, including accelerating payment of the entire amount outstanding
under the Credit Facility. As of January 29, 2010, there is approximately
$314.3 million outstanding under the Credit Facility. Without the Waiver
Letter, the earliest date on which the Overadvance Event of Default under the
Credit Facility described above would have occurred is January 26,
2010.
OHI
Financing, Inc., a wholly-owned subsidiary of the Company, did not make the
scheduled $639,000 quarterly interest payment due on December 30, 2009 under the
8.52% junior subordinated note underlying the $30 million issue of trust
preferred securities during the applicable grace period. As a result, an
event of default occurred on January 30, 2010 under the junior subordinated note
indenture dated as of September 30, 2005 entitling the trustee and/or the
holders of the trust preferred securities to exercise all of their remedies
under such junior subordinated note indenture, including accelerating payment of
the outstanding principal and accrued, but unpaid interest. Currently,
there is $30 million of principal outstanding under the 8.52% junior
subordinated note, plus accrued interest of approximately $1.5 million.
The junior subordinated note is guaranteed on a subordinated basis by the
Company.
In
addition, the Company failed to make the $235,000 payment due on January 30,
2010 under the junior subordinated notes issued on August 3, 2009. While
the Company is entitled to a 30-day grace period under the notes, if it
fails to make the payment during that time, an event of default will occur
entitling the holders of the junior subordinated notes to exercise all of their
remedies under the applicable junior subordinated note indenture, including
accelerating payment of the outstanding principal and accrued, but unpaid
interest. Currently, there is $93.75 million of principal outstanding
under the junior subordinated notes (increased from $75 million pursuant to the
Exchange Agreement dated August 3, 2009), plus accrued interest of approximately
$235,000. The junior subordinated notes are guaranteed on a
subordinated basis by the Company.
Item
9.01 Financial Statements and Exhibits.
(d)
Exhibits
The
following exhibits are filed or furnished with this Current Report on
Form 8-K:
Exhibit No.
|
|
Description
|
|
|
|
10.1
|
|
Third
Limited Waiver Letter, dated as of January 25, 2010, by and among
Greenwood Financial, Inc. and certain affiliates, Orleans
Homebuilders, Inc., Wachovia Bank, National Association and various
other lenders party thereto (filed herewith).
|
99.1
|
|
Press
release of Orleans Homebuilders, Inc. dated February 1, 2010
(furnished herewith).
|
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
Dated:
February 1, 2010
|
Orleans
Homebuilders, Inc.
|
|
|
|
By:
Garry P.
Herdler
|
|
Name:
Garry P. Herdler
|
|
Title:
Executive Vice President,
|
|
Chief
Financial Officer and
|
|
Principal
Financial Officer
|
EXHIBIT
INDEX
The
following exhibits are filed or furnished with this Current Report on
Form 8-K:
Exhibit No.
|
|
Description
|
|
|
|
10.1
|
|
Third
Limited Waiver Letter, dated as of January 25, 2009, by and among
Greenwood Financial, Inc. and certain affiliates, Orleans
Homebuilders, Inc., Wachovia Bank, National Association and various
other lenders party thereto (filed herewith).
|
99.1
|
|
Press
release of Orleans Homebuilders, Inc. dated February 1, 2010
(furnished herewith).
|
Orleans Homebuilders (AMEX:OHB)
Historical Stock Chart
From Apr 2024 to May 2024
Orleans Homebuilders (AMEX:OHB)
Historical Stock Chart
From May 2023 to May 2024