Orleans Homebuilders amends loan to extend maturity, reduce size, change covenants

By Jennifer Chiou

New York, Sept. 12 - Orleans Homebuilders Inc. amended its revolving credit facility, pushing out the maturity by one year to Dec. 20, 2009 and cutting the size to $585 million from $650 million, according to a company news release.

In addition, the amendments made other modifications to financial covenants and certain definitions.

Covenant modifications included:

• On or before Dec. 31, the maximum borrowing base availability may not exceed 45%; after Dec. 31, the maximum borrowing base availability may not exceed 37.5%;

• The debt service coverage ratio covenant was eliminated for the fiscal quarters ended June 30, ending Sept. 30 and Dec. 31 while the minimum ratio was reduced for all periods thereafter;

• The required minimum consolidated tangible net worth was reduced effective June 30, and the definition of consolidated tangible net worth was amended for all times on or after July 1;

• A required liquidity level based on cash plus borrowing base availability was added, and under this covenant, the company must have (i) at least $10 million of cash and cash equivalents at all times and (ii) at least $15 million of liquidity, including the cash and cash equivalents; and

• The applicable interest spread grid was also amended, effective Sept. 1, such that the company's applicable interest spread increased by 25 basis points to 275 bps over Libor.

The amendment was completed on Sept. 6, but is effective as of Sept. 7, when the supplemental indenture to the company's $75 million of 8.61% trust preferred securities executed on Aug. 13 became effective.

"With this credit facility extension, we now believe that, unless industry conditions continue to deteriorate, the company should have access to the necessary capital to continue to operate its business in accordance with its existing business plan through the facility's extended maturity in December 2009," chairman and chief executive officer Jeffrey P. Orleans said in the release.

Orleans is a Bensalem, Pa.-based residential homebuilder.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.