10. Orleans Homebuilders, Bensalem, Pa.
Even as some segments of the housing industry are showing a pulse again, many builders are hanging on by their fingernails financially. One of these is Orleans Homebuilders, the industry’s 35th-largest builder in 2008, which limps into 2010 playing beat the clock to find some way to either meet its debt obligations or find a buyer for its operations.
In late December, Orleans and its lenders began executing a limited waiver and amendment extension to the company’s $375 million revolving credit line, which as of Dec. 21 had approximately $317.9 million outstanding. The amendment extends the maturity of the credit line to at least Jan. 29, and possibly Feb. 12, depending on whether Orleans meets the terms of this agreement and doesn’t default further.
Some industry watchers seem convinced, however, that the amended loan agreement amounts to little more than Orleans waving the white flag. TheStreet.com, for example, pointed to loan-term agreements that are linked to the potential sales of Orleans or the liquidation of its undeveloped land. (As of March 31, 2009—the last period for which the builder has filed a financial report with the SEC—Orleans owned or controlled 5,893 lots. The builder’s filing did not indicate what portion of these lots is undeveloped.)
The builder has hired two “strategic advisors”—BMO Capital Markets Corp. and Lieutenant Island Partners—to explore a potential sale or recapitalization. Short of either, Orleans has stated it probably won’t have enough capital to continue normal operations for an extended time.
John Caulfield is senior editor for BUILDER magazine.