Orleans Homebuilders out of bankruptcy with $160 million of financing

By Caroline Salls

Pittsburgh, Feb. 14 - Orleans Homebuilders, Inc. has completed its financial reorganization and emerged from Chapter 11 protection with $160 million in new financing, according to a company news release.

The company said the new financing includes a $30 million revolving credit facility. In November, the company also received court approval to enter into a letter agreement in connection with a $125 million term loan.

On Nov. 29, a market source said price talk on the term loan was Price talk on the term loan is Libor plus 650 basis points with a 2% Libor floor and an original issue discount of 98.

Orleans, which was publicly traded for many years, will now be privately owned, the release said. All of the old shares in the company have been canceled.

The company said previously that the plan would reduce its debt to less than $200 million upon emergence from more than $400 million at the time of the bankruptcy filing.

Under the terms of Orleans' plan of reorganization:

• All administrative, debtor-in-possession facility, tax, priority and some secured and operational lien claims will be paid in full;

• Holders of some pre- and post-bankruptcy secured claims will receive their share of common stock in the reorganized company, new notes and cash depending on their relative priority;

• Holders of general unsecured claims will receive their share of avoidance claim proceeds of sales of assets unencumbered as of the date of the bankruptcy filing. These holders may also participate in some potential recoveries from avoidance actions.

• Holders of general unsecured claims may elect to convert their claims to a convenience class, which provides for a 3% cash payment based on claims limited to $25,000;

• Holders of junior subordinated notes and trust preferred securities will receive recovery comparable to the class of general unsecured creditors, which recoveries, other than some potential recoveries from avoidance actions, will be turned over to some of the company's secured creditors. All junior notes and trust preferreds will be canceled on the effective date of the plan; and

• No distributions will be made to equity holders.

As part of the company's new corporate structure, a new board of directors was appointed.

Orleans said one of the new board's first actions is expected to be the appointment of homebuilding veteran George E. Casey Jr. as chief executive officer. Casey has served as a special assistant to the chief restructuring officer of the company since November.

Orleans Homebuilders, a Bensalem, Pa.-based developer, builder and marketer of single-family homes, townhouses and condominiums, filed for bankruptcy on March 1. The Chapter 11 case number is 10-10684.

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