Irvine-based builder Standard Pacific Homes has reached an agreement with the private equity firm MatlinPatterson Global Advisers LLC in which MatlinPatterson will invest more than $530 million. From a MarketWatch.com story:
The deal calls for MatlinPatterson to buy about $382 million of a new series of senior convertible preferred stock representing 125 million shares at a conversion price of $3.05. The price is a 37% premium over Standard Pacific stock based on May 23 closing prices.
Also, MatlinPatterson will exchange roughly $128.5 million of the company's debt for warrants to acquire preferred stock representing 89.4 million shares of common stock at an exercise price of $4.10 a share, according to a press release.
"This capital infusion will strengthen our balance sheet, enhance our financial flexibility and provide funding for future growth opportunities," said Jeffrey Peterson, Standard Pacific chief executive, in a statement. Peterson took over as CEO and chairman in March after the previous chief, Steve Scarborough, retired.
Standard Pacific shares were up about 64% at last check to $3.65...
Standard Pacific has been one of the hardest-hit residential builders during the housing bust. Earlier this month, it reported a wider quarterly loss and booked more impairment charges. Management said the home builder was exploring alternative financial and strategic options, including a potential sale of the company...
Morningstar Inc. analyst Eric Landry in a May 13 research note wrote Standard Pacific was being squeezed by too much land, debt and joint ventures.
"As a result, Standard Pacific now finds itself in an extreme liquidity crisis, as plunging prices in the company's markets have robbed it of the profitability needed to stay compliant, even with amended indenture covenants," he said.
"Consequently, we expect management to seek alternatives that will likely turn out very badly for existing shareholders," Landry added. "Most likely possibilities include dilutive share offerings, or some sort of a distressed sale."
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