TOUSA Announces Pre-Negotiated Deal With Senior Noteholders to Implement Restructuring
January 29 2008 - 6:05AM
PR Newswire (US)
- Files Voluntary Petitions to Reorganize Under Chapter 11 to
Implement Proposed Restructuring Term Sheet HOLLYWOOD, Fla., Jan.
29 /PRNewswire-FirstCall/ -- TOUSA, Inc. (Pink Sheets: TOUS) --
TOUSA, Inc. today announced that it has received support from
holders of more than fifty percent of its Senior Noteholders on a
proposed term sheet for restructuring its equity and all of its
unsecured debt. To implement the proposed restructuring TOUSA, Inc.
and certain subsidiaries are filing voluntary petitions for relief
under Chapter 11 of the U.S. Bankruptcy Code. The filing includes
TOUSA Homes, Inc., Newmark Homes LP and entities that represent all
of their brands -- Engle Homes, Newmark Homes, Fedrick, Harris
Estate Homes, and Trophy Homes. The agreement with the senior
noteholders is subject to conditions and is also subject to a
"fiduciary out" clause that can be exercised by both the Company
and the noteholders under certain circumstances. Universal Land
Title, Inc., Preferred Home Mortgage Company and Alliance Insurance
and Information Services are not included in the filing and will
not be impacted. These financial affiliates will continue to offer
and fund loans, provide title insurance and offer homeowners the
financial and insurance services needed to close escrow on home
purchases. Customers will see no interruption in the services
provided by TOUSA's financial affiliates. The Company's proposed
restructuring is the result of the dramatic downturn in the U.S.
housing market, which accelerated over the last several months due
to a number of factors, including severe liquidity challenges in
the credit and mortgage markets, diminished consumer confidence,
increased home inventories and foreclosures, and downward pressure
on home prices. All of these factors have contributed to lower
gross sales and higher cancellation rates. "This action is
necessary to reflect the realities of today's homebuilding market.
Our core operations are solid, and our market position suggests a
strong future for our Company," said Antonio B. Mon, TOUSA's
President and Chief Executive Officer. "We are focused on
restructuring our balance sheet and we expect business to continue
as usual. Most importantly, there should not be any interruption in
the construction of homes and our customers should not be
affected." Citigroup Global Markets Inc. has agreed to provide the
Company with up to $150 million in debtor-in-possession financing.
If approved by the Court, the Company will have access to the funds
to implement its restructuring plan and pay normal operating
expenses, including employee wages, construction costs, and
payments to suppliers. The financing will be senior to existing
debt and requires Bankruptcy Court approval. The proposed
restructuring agreement with the Senior Noteholders contemplates,
among other things, that the Senior Noteholders will receive
substantially all of the common stock of the reorganized Company,
as well as an interest in, and entitlement to proceeds received by,
a litigation trust that will be established pursuant to the
Company's plan of reorganization. Holders of general unsecured
claims will also receive their pro rata share of the common stock
of the reorganized Company and an interest in the litigation trust.
Subject to further negotiation, holders of the Company's
subordinated notes may receive a proportionate share of proceeds
generated by the litigation trust and may receive warrants to
acquire a specific percentage of common stock in the reorganized
Company. At the date of filing, TOUSA had approximately 2,500 homes
in backlog. TOUSA anticipates delivering all of its homes in
backlog and will continue to actively take new orders, construct
new homes, and provide financial services to its customers. The
Company will seek the Court's immediate approval to continue paying
employee wages, benefits and commissions. The Company is seeking
court authorization to establish procedures to pay valid lien
claims in the ordinary course of business and to sell homes free
and clear of all liens, with such liens to attach to the proceeds
of the sales. "We are committed to maintaining our operations
uninterrupted, including all construction and sales activities
while continuing to provide our customers with the high levels of
service and quality that have come to be associated with our
brands," Mr. Mon said. To that end, the Company is seeking Court
authority to continue all of its customer service programs. The
Company has contracted with the Administrator of its current
HomeBuilder's Limited Warranty program to provide at no cost to the
customer a ten year transferable supplementary warranty to those
TOUSA homebuyers with contracts of sale currently in force as well
as those customers who sign a contract of sale between now and
April 30, 2008. The new program is insured by one of the member
companies of Zurich North America, one of the largest insurance
organizations in the United States and rated "A/positive"
(Excellent) by A.M. Best and Company, the leading independent
insurance Company rating service. In the event that TOUSA fails to
fulfill its obligations to "eligible" homebuyers under its existing
program, the insurer will perform according to the terms and
conditions contained within the supplemental document. "We decided
to take decisive action to ensure TOUSA is around for the
long-run," Mr. Mon said. "While making this decision was not an
easy one, Chapter 11 is a tool that enables us to restructure our
balance sheet, reduce our debt and position us so that we can
continue to build and deliver the highest-quality homes through our
Engle Homes, Newmark Homes, Fedrick, Harris Estate Homes, and
Trophy Homes brands." The filing was made in the U.S. Bankruptcy
Court for the Southern District of Florida, Fort Lauderdale
Division. For more information, please visit http://www.tousa.com/.
About TOUSA, Inc. TOUSA, Inc. is a leading homebuilder in the
United States, operating in various metropolitan markets in 10
states located in four major geographic regions: Florida, the
Mid-Atlantic, Texas, and the West. TOUSA designs, builds, and
markets high-quality detached single-family residences, town homes,
and condominiums to a diverse group of homebuyers, such as
"first-time" homebuyers, "move-up" homebuyers, homebuyers who are
relocating to a new city or state, buyers of second or vacation
homes, active-adult homebuyers, and homebuyers with grown children
who want a smaller home ("empty-nesters"). It also provides
financial services to its homebuyers and to others through its
subsidiaries, Preferred Home Mortgage Company and Universal Land
Title, Inc. For more information on TOUSA, please visit our website
at http://www.tousa.com/. This press release may contain
forward-looking statements within the meaning of within the meaning
of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended,
including statements regarding the intent, belief or current
expectations of the Company and its management. Any such
forward-looking statements are not guarantees of future performance
and involve a number of risks and uncertainties that could
materially affect actual results such as, but not limited to: (i)
the Company's ability to continue as a going concern; (ii) the
ability of the Company to operate pursuant to the terms of any
debtor-in- possession facility; (iii) the Company's ability to
obtain court approval with respect to motions in the Chapter 11
proceeding; (iv) the ability of the Company to develop, confirm and
consummate one or more plans of reorganization with respect to the
Chapter 11 proceeding; (v) risks associated with third parties
seeking and obtaining court approval to terminate or shorten the
exclusivity period for the Company to propose and confirm one or
more plans of reorganization, for the appointment of a Chapter 11
trustee or to convert the cases to Chapter 7 cases; (vi) the
ability of the Company to obtain and maintain normal terms with
vendors and service providers; (vii) the Company's ability to
maintain contracts that are critical to its operations; (viii) the
potential adverse impact of the Chapter 11 cases on the Company's
liquidity or results of operations; (ix) the ability of the Company
to fund and execute its business plan;(x) the ability of the
Company to attract, motivate and/or retain key executives and
employees; (xi) the ability of the Company to attract and retain
customers and (xii) other risks and factors regarding the Company
and the home building industry identified from time-to-time in the
Company's reports filed with the SEC, including the risk factors
identified in its Annual Report on Form 10-K for the year ended
December 31, 2006, and its Quarterly Reports on Form 10-Q for the
quarters ended March 31, 2007, June 30, 2007, and September 30,
2007, which can also be found on the Company's website at
http://www.tousa.com/. All information set forth in this news
release is as of today's date, and the Company undertakes no duty
to update this information. DATASOURCE: TOUSA, Inc. CONTACT: TOUSA,
Inc. Information Hotline, 1-866-588-9290; or Jennifer Mercer of
TOUSA, Inc., +1-954-364-4013, Web site: http://www.tousa.com/
Copyright