On Monday, Aug. 18, Standard Pacific Homes' stockholders gave the nod to a stock conversion plan that closed the second part of its deal with MatlinPatterson Global Advisors, a private equity firm that is infusing the heavily-indebted company with $530 million in cash.

MatlinPatterson also received three seats on the company's board as part of the deal.

"It's a great accomplishment on the part of a lot of people to really bring this whole transaction together and bring closure to it," Jeffrey V. Peterson, Standard Pacific's CEO, told Big Builder on Tuesday morning.

The third and final phase of the deal, a $152.5 million--or $3.05 a share--rights offering for approximately 50 million shares of common stock, is expected to be finalized in about a week. Existing stockholders will be able to participate in the offering on a pro-rata ownership basis. MatlinPatterson has agreed to buy any unsold shares of the preferred stock.

The first phase of the partnership closed in late June when MatlinPatterson bought roughly $381 million of new Standard Pacific senior convertible preferred stock. After shareholder approval on Monday, that stock converted to an equivalent amount of junior participating convertible preferred stock. Those shares, plus other shares of junior convertible stock issued to MatlinPatterson in June in exchange for $128.5 million of the company's bond debt, can all now convert to common stock in the company.

The effect of all the stock issuances is dilution of the company's shares. The stockholder approvals nearly tripled the number of shares the company can issue from 210 million to 610 million.

"With the closing of the first phase of MatlinPatterson's investment, the amendment to our credit facilities, and with a substantial increase in our cash on hand, we believe we are well positioned to weather the current housing downturn and to take advantage of opportunities as they arise," Peterson said after the June closing.

The closing of the MatlinPatterson deal was contingent upon Standard Pacific amending its bank credit facilities. Under the amendments, Standard Pacific reduced its total revolving line of credit from $500 million to $395 million, paid down its revolver balance from $90 million to $50 million, and paid one of its term loan credit facilities down from $100 million to $65 million. It also agreed to make quarterly principal amortization payments of $2.5 million under the revolver and the term loan, as well as to secure future borrowings.

Shortly after former CEO Steve Scarborough retired in the spring, Standard Pacific announced it was exploring options to infuse the company with capital. The company has a large amount of debt coming due

in the next few years that it was worried it would not be able to repay due to its drastically reduced sales pace.

"We talked to strategic partners and financial entities," Peterson said during a June 19 Bank of America investor conference. "Many of the speakers today, we have had dialogues with in the past. ? We were talking to the usual suspects [including some foreign fund investors."

But it was a non-usual suspect who called. MatlinPatterson's David Patterson called Standard Pacific to express interest in investing in the company. MatlinPatterson, which has assembled billions of dollars to be invested in the home building sector, had already invested $128 million in the company's bond debt--the same debt it later traded for stock. "Unbeknownst to us, they had done due diligence on us," Peterson said.