By Sara Rosenberg
New York, Aug. 24 - Standard Pacific Corp. is looking to amend its credit facility, reducing the overall size, increasing pricing and modifying covenants, according to an 8-K filed with the Securities and Exchange Commission Friday.
Under the amendment proposal, the company's $1.1 billion revolver would be downsized to $900 million and its $250 million term loan B would be downsized to $225 million, while its $100 million term loan A size would remain unchanged.
Pricing on the term loan B would be increased to Libor plus 175 basis points, and the revolver and term loan A pricing grids would be revised (see table).
As for covenants, the interest coverage ratio would be able to reduce to less than 1.75 times but greater than 1.25 times for eight consecutive quarters during a one-time period. Additionally, the ratio could be less than 1.25 times but greater than 1.00 times in any of four quarters during the eight-quarter reduction period.
During the eight-quarter interest coverage ratio reduction period, the company would not be allowed to repurchase capital stock. This prohibition would be lifted only after the ratio is greater than 1.75 times for two consecutive calendar quarters.
Repurchases of capital stock are also prohibited if it would result in less than a $250 million cushion above the minimum consolidated tangible net worth calculated as of the end of the preceding quarter.
The total leverage ratio, which currently stands at 2.25 times, would be reduced to less than 1.75 times for the remaining two calendar quarters in 2007 and the first two calendar quarters of 2008, less than 1.65 times for the third and fourth calendar quarters of 2008, less than 1.5 times for all four calendar quarters of 2009, and less than 1.5 times for all four calendar quarters of 2010, unless the interest coverage ration is greater than 1.75 times for two consecutive calendar quarters, at which point the leverage ratio may increase to 2.0 times the following quarter and remain at that level thereafter.
The consolidated tangible net worth covenant base would be reset to $1 billion from the current $1.373 billion, plus 50% of cumulative consolidated net income for each fiscal quarter plus 50% of net proceeds from any equity offerings.
The amendment would also expand reporting requirements to include additional joint venture information in the quarterly and annual reporting packages going forward.
Bank of America and JPMorgan, the lead banks on the credit facility, have indicated their preliminary intent to approve the covenant modifications, the filing said.
Approval of the proposed amendments will require the consent of the holders of two-thirds of the combined commitment under the revolver and term loan A.
Standard Pacific is an Irvine, Calif.-based builder and seller of single-family attached and detached homes.
Table: Revolver and Term Loan A Revised Pricing Grid
| Debt Ratings | Leverage Ratio | Revolver Spread | Revolver Unused Fee | Term A Spread
|
| BBB-/Baa3 | <1.0x | 100 bps | 20 bps | 117.5 bps
|
| BB+/Ba1 | >1.0x but <1.25x | 120 bps | 22.5 bps | 132.5 bps
|
| BB/Ba2 | >1.25x but <1.75x | 140 bps | 25 bps | 152.5 bps
|
| BB-/Ba3 | >1.75x but <2.00x | 155 bps | 27.5 bps | 167.5 bps
|
| B+/B1 | >2.00x | 200 bps | 30 bps | 212.5 bps
|
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