Newport Beach-based William Lyon Homes Inc. plans to move ahead on a trio of proposed Orange County housing projects—in addition to other sizeable developments it has outside the area—despite filing for bankruptcy last month.
The privately held builder, which was valued at more than $900 million near the peak of the last housing boom, filed a prepackaged bankruptcy and plan of reorganization Dec. 19, listing about $510 million in debt. The company’s reorganization plans include a proposal to slash the builder’s debt by about $180 million, and raising $85 million in new money.
The filing had been in the works for several months and has the blessing of the build-er’s main lenders and bondholders, which in-clude Santa Monica-based hedge firm Col-ony Capital LLC and New York-based hedge fund Luxor Capital Group LP. An affiliate of Colony is set to provide William Lyon Homes $30 million in interim financing to operate during its stay in bankruptcy, which is expected to last three months.
An overview of the builder’s reorganization plans were disclosed prior to the company’s bankruptcy. But a slew of court filings made at the time of the bankruptcy shed some light on some of the company’s plans going forward, including near-term land buys and personnel matters.
The company doesn’t appear to be using the bankruptcy process to shed any unwanted land holdings, based on a reading of court documents. The homebuilder, in fact, has asked Delaware’s federal bankruptcy court to allow it to honor a number of pricey land-purchase agreements it previously struck but has yet to move ahead on.
The agreements require short-term land development and project finance payments totaling nearly $3 million.
Larger developments that are in the works and will require interim payments include a 27-acre site near Palo Alto called Mayfield, where several hundred homes are planned. Another is a golf-course residential development near Las Vegas, where the builder still owes nearly $7 million under an existing loan agreement.
School Parcels
William Lyon Homes also is still working with local landowners, including the Irvine Unified School District, which owns two parcels of land previously used as schools where more than 100 homes have been proposed.
The company plans to build 55 single-family homes at the former Vista Verde School in Irvine’s University Park neighborhood and another 48 homes at the former Alderwood Elementary School in Woodbridge.
The builder inked a deal in 2009 with the school district to buy the land parcels, which total about 14.5 acres, for nearly $29 million. The projects are still being reviewed by the city’s planning commission.
William Lyon Homes has been paying the school district $137,000 a month in interest payments for the option to buy the land, and has until June to exercise that option, according to court records. It has asked the court to approve the monthly interest payments tied to the projects.
The company also is planning to buy a smaller parcel of Rancho Mission Viejo land for a little less than $5 million once it emerges from bankruptcy, according to records.
Larger Development
The land, near the intersection of Ortega Highway and Antonio Parkway, is part of a larger proposed development that could hold upward of 800 homes, according to county records.
The company said it plans to begin building on the Rancho Mission Viejo land immediately after it takes ownership of the site, and wants court approval to move ahead on $250,000 worth of early-stage development fees, according to court filings.
The parcel in Rancho Mission Viejo is owned in part by Gen. William Lyon, the builder’s cofounder and chief executive, but was not part of last month’s bankruptcy.
Gen. Lyon and his family have agreed to invest $25 million in the builder post-bankruptcy; the purchase price of the Rancho Mission Viejo land would be counted against that total, according to court records.
Court filings detail a few more changes expected in the builder’s executive and ownership ranks.
Gen. Lyon and his family currently own about 95% of the company, which he took private in 2006.
Following the restructuring, Lyon will owns about 20% of the builder, and will be given warrants to buy an additional 9% of the company’s common stock.
Gen. Lyon and his son, William H. Lyon, the company’s president, will be entering three-year employment contracts with the company as part of the restructuring. The contract calls for a $1.5 million combined annual salary, plus incentives, according to court records.
18 Projects
William Lyon Homes, which builds in California, Nevada and Arizona, currently has 18 active housing projects, according to court documents.
It expected to sell about 630 homes in 2011, with 40% of those sales in Southern California, its largest market right now. Those sales should bring about $219 million in revenue, according to company projections disclosed last November.
The company projects 1,620 home sales by 2015, bringing in nearly $684 million in revenue, assuming market conditions improve.
