Shares of Standard Pacific Corp. slumped Tuesday on word the Irvine-based homebuilder is discounting shares for an investment firm that provided it with a lifesaving deal two years ago.
Standard’s shares closed down nearly 10% to a market value of $370 million.
The company said it reworked an agreement with New York-based MatlinPatterson Global Advisers LLC that allows the firm to exercise warrants to buy Standard Pacific stock at $2.09 a share, according to an Associated Press report.
That’s about half the price originally called for and about 45% lower than what Standard Pacific’s shares closed at before the reworked deal was disclosed.
MatlinPatterson now controls about half of the voting stock of Standard Pacific and holds warrants that convert into 89 million preferred shares, worth about $188 million at the discounted rate.
The reworked agreement calls for MatlinPatterson to hold its Standard Pacific shares for the next nine months.
Standard Pacific plans to use the proceeds of the deal for land acquisitions and to apply for a revolving credit line.
With Standard Pacific facing the prospect of bankruptcy in 2008, the company struck a $530 million financing deal with MatlinPatterson.
The deal saw MatlinPatterson buy $381 million in new stock and retire $128.5 million worth of Standard Pacific debt in exchange for warrants for stock.
