Pacific Lifestyle Homes has moved one step closer to emerging from Chapter 11. Last Tuesday, the Vancouver, Wash.-based builder reached an accord with its three bank lenders that will allow it to resume new-home construction.
This agreement follows Pacific Lifestyle’s successful liquidation of 50 inventory homes through sales that concluded on March 31. Within the next few weeks, the company plans to participate in another multi-builder liquidation, which is being conducted by NewHomeSale.org, an online liquidation company.
(On its Web site, NewHomeSale.org says this three-builder sale will include more than 100 homes and run through June 30. One of Pacific Lifestyle’s homes being showcased is a 2,834-square-foot, four-bedroom house in Washougal, Wash., that had been priced at $374,398 but is now being offered at $317,900. A 4,462-square-foot, five-bedroom home in Camas, Wash., which had been priced at $587,500, has been discounted to $469,000.)
In October, the 13-year-old Pacific Lifestyle Homes filed for protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code. At the time, the company had approximately $56 million in bank debt. Its president, Kevin Wann, told BUILDER last week that he expects to have a reorganization plan approved by creditors by the end of this year. If that schedule holds, Pacific Lifestyle would be one of the few builders that have emerged from Chapter 11 as an operating entity.
Wann declined to say what his company’s debt burden is right now, explaining that he and his advisors are still determining the value of Pacific Lifestyle’s assets. (The Portland Business Journal reports that the company has just less than $12 million in cash on its books.) His company has negotiated a line of credit from its lenders that Wann says falls somewhere between $7 million and $8 million. The construction agreement he struck with the banks permits Pacific Lifestyle to build one new home for every inventory house it can sell. Under that formula, Wann expects his company to build about 45 homes through the remainder of this year.
The homes that Pacific Lifestyle is building have been scaled down. “We’re not building 4,000-square-foot houses anymore,” says Wann. “They’re now around 2,600 square feet” and are priced between $315,000 and $330,000.
John Caulfield is senior editor at BUILDER magazine.