Orleans Homebuilders amends loan to avoid borrowing base reductions

By Sara Rosenberg

New York, Aug. 14 - Orleans Homebuilders Inc. amended its revolving credit facility, avoiding reductions in borrowing base availability, according to an 8-K filed with the Securities and Exchange Commission on Friday.

Under the amendment, the maximum borrowing base availability attributable to work-in-progress inventory not subject to a qualifying agreement of sale will be maintained at the existing 58% of total work-in-process inventory, including backlog units, rather than being reduced to 45% for the borrowing base certificate as of July 31.

Also, the maximum borrowing base availability attributable to land under development will be maintained at the existing 65% of total borrowing base availability, rather than otherwise being reduced to 55% for the borrowing base certificate as of July 31, but generally subject to a maximum of $235 million prior to Sept. 30.

In addition, the definition of borrowing base availability was modified to exclude up to $5.1 million of existing financial letters of credit through and including Sept. 29.

Furthermore, the minimum liquidity covenant was amended to temporarily reduce the amount of liquidity required to be maintained to not less than $0 through and including Sept. 29, and not less than $10 million thereafter, and the additional loan fee under the existing loan agreement was postponed until Sept. 30 from Sept. 15.

The amendment was done to address the company's near-term liquidity through about Sept. 30, while providing additional time for it to work with lenders on a credit facility maturity extension and certain longer-term modifications to borrowing base availability and other covenants.

Currently, the credit facility matures on Dec. 20.

The amendment was completed on Aug. 13.

Wachovia is the administrative agent on the deal.

Orleans Homebuilders is a Bensalem, Pa.-based developer, builder and marketer of single-family homes, townhouses and condominiums.

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