Orleans Homebuilders loan matures, Wachovia Bank demands payment

By Caroline Salls

Pittsburgh, Feb. 19 - Orleans Homebuilders, Inc.'s second amended and restated revolving credit loan agreement matured on Feb. 12, triggering a default, after the company and its lenders were unable to obtain the required bank approvals to extend the maturity date, according to a company news release.

Orleans said any extension or similar changes to the credit facility required the consent of 100% of the 17 bank lenders.

According to an 8-K filed with the Securities and Exchange Commission, Orleans received a notice of default and demand for payment from Wachovia Bank, NA on Feb. 17 in connection with the company's failure to repay the amounts outstanding on the credit facility on the maturity date.

An additional event of default has occurred as a result of Orleans' failure to comply with a provision that prohibits it from granting or allowing any lien on any of the assets of the company or any credit facility borrower, other than specified permitted liens.

The default interest rate, which is 4% higher than the original interest rate, will be applied until the credit facility is repaid.

According to the release, Orleans does not have enough funds to repay the amounts outstanding under the credit facility, and it is continuing to consider options for new or modified funding sources to continue normal operations.

These options include an in-court or out-of-court restructuring of the company's debt, continuing its negotiations regarding a sale or recapitalization or obtaining a temporary modification or other accommodation under the credit facility.

As of Thursday, there were $310.6 million of borrowings and $15 million of letters of credit outstanding under the credit facility.

In addition, Orleans there were $15.1 million in additional loan fees due upon maturity.

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

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