William Lyon amends term loan in light of possible asset impairment

By Angela McDaniels

Tacoma, Wash., March 21 - William Lyon Homes subsidiary William Lyon Homes, Inc. amended the tangible net worth covenant of its $206 million senior secured term loan on Friday, according to an 8-K filing with the Securities and Exchange Commission.

Under the loan agreement, the company is required to maintain a tangible net worth of at least $75 million. The loan agreement was amended so that this covenant will be breached only if the company fails to maintain the minimum tangible net worth for two consecutive fiscal quarters.

The amendment is retroactive to the quarter ended Dec. 31, and it will remain in effect up to but excluding Dec. 31, 2011.

In connection with its annual audit for 2010, the company is finalizing a non-cash impairment analysis of its real estate inventories. The amendment was made in light of the possibility of impairments, although the company noted that it has not been determined whether, and to what extent, any impairment exists.

Colfin WLH Funding, LLC is the administrative agent.

William Lyon is a homebuilder based in Newport Beach, Calif.

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