Another small home builder on the edge -- Comstock
There's an announcement out of Comstock Homebuilding late today. Comstock is a small public builder that operates in the Washington D.C. area, as well as around Raleigh, N.C. and Atlanta, GA. Things don't look good, with the builder planning to halt certain interest payments and retaining FTI Consulting, a leading restructuring/bankruptcy advisory firm. A few excerpts from the statement ...
"Comstock Homebuilding Companies, Inc. today announced that it has retained FTI Consulting, Inc. to act as an advisor to the Company with respect to strategic and financial alternatives in the face of a prolonged real estate downturn. FTI has been engaged to work closely with the Company and its lenders to evaluate operational and financial strategies intended to enhance long term enterprise value.
"In connection with the exploration of available debt restructuring alternatives, the Company has elected to cease making certain scheduled interest and/or principal curtailment payments while it attempts to negotiate modifications or other satisfactory resolutions from its lenders. The subject indebtedness represents a significant number of the Company's projects. The failure to make such interest and/or principal curtailment payments constitutes breaches of the terms of the loan agreements, some of which have reached maturity. If such breaches are not cured prior to the expiration of any applicable grace periods and such matured loans are not extended, then, under the terms of the loan agreements, the lenders may be entitled to charge an increased, or default, rate of interest and/or declare the principal amount to be immediately due and payable in full. The Company anticipates that it may be forced to cease making certain additional scheduled interest or principal curtailment payments in the near future if meaningful concessions are not derived in the on-going negotiations with its lenders.
"The aggregate amount of the Company's and its affiliates' outstanding indebtedness at June 30, 2008 was approximately $157 million, and it is anticipated that scheduled interest or principal curtailment payments will be ceased with respect to up to $94 million of this indebtedness where sufficient interest reserves are not currently in place."
Oh and so much for a quiet day. Big declines at Fannie Mae and Freddie Mac, coupled with ongoing concerns about the ability of the nation's banks to raise capital, helped lead to a 237 point rout in the Dow. Ouch.
"Comstock Homebuilding Companies, Inc. today announced that it has retained FTI Consulting, Inc. to act as an advisor to the Company with respect to strategic and financial alternatives in the face of a prolonged real estate downturn. FTI has been engaged to work closely with the Company and its lenders to evaluate operational and financial strategies intended to enhance long term enterprise value.
"In connection with the exploration of available debt restructuring alternatives, the Company has elected to cease making certain scheduled interest and/or principal curtailment payments while it attempts to negotiate modifications or other satisfactory resolutions from its lenders. The subject indebtedness represents a significant number of the Company's projects. The failure to make such interest and/or principal curtailment payments constitutes breaches of the terms of the loan agreements, some of which have reached maturity. If such breaches are not cured prior to the expiration of any applicable grace periods and such matured loans are not extended, then, under the terms of the loan agreements, the lenders may be entitled to charge an increased, or default, rate of interest and/or declare the principal amount to be immediately due and payable in full. The Company anticipates that it may be forced to cease making certain additional scheduled interest or principal curtailment payments in the near future if meaningful concessions are not derived in the on-going negotiations with its lenders.
"The aggregate amount of the Company's and its affiliates' outstanding indebtedness at June 30, 2008 was approximately $157 million, and it is anticipated that scheduled interest or principal curtailment payments will be ceased with respect to up to $94 million of this indebtedness where sufficient interest reserves are not currently in place."
Oh and so much for a quiet day. Big declines at Fannie Mae and Freddie Mac, coupled with ongoing concerns about the ability of the nation's banks to raise capital, helped lead to a 237 point rout in the Dow. Ouch.
posted by Mike Larson at
4:23 PM
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