Dominion Homes on Dec. 20 announced that its president and COO, Jeffrey Croft, will leave the company at yearend "to pursue other interests." The board of directors has appointed Douglas G. Borror, chairman and CEO, to take on the additional role of president and William G. Cornely, who is currently CFO, to become COO.

Under the terms of the separation agreement, Croft, a former regional executive for Pulte Homes, will continue in his role for up to 30 days and will then provide up to 60-hours of "post-separation" support. He'll receive a total cash severance payout of $600,200. Croft agreed to forfeit any unvested award of equity compensation he has received.

In March of 2006, Croft was brought in by the Borror family, (which founded Dominion and owns approximately 46.6% of Dominion's shares through BRC Properties, Inc.) to resurrect a company that many said had dug too deep a hole. Not only had Dominion gone long on owned land in its primary Columbus, Ohio market during a run-up in 2003 and 2004, but the company was facing a public relations crisis related to unethical sales and mortgage loan practices, documented violations, and unusually high foreclosure rates.

Along with Cornely, who was brought on board in January 2006, Croft spent his tenure focused on generating cash as the company stared down the barrel of a tenuous debt load. The duo told Big Builder in an interview July 2006 of their intentions to sell land, improve processes and gain efficiencies. "We'll be a better business in six months than we are now," Croft said at the time. "But I don't know if it'll show up in our results because I can't control market conditions."

Those results never materialized, and as the broader market began to turn, the pressures became even more intense. The company posted net losses during each quarter in 2006 and 2007.

Sales continued to fall. In the most recent quarter, Dominion posted just 153 sales, down nearly 80% from peak in the third quarter of 2003. It is widely believed to be holding too much land. In March of 2005, the company owned 20,097 lots, at the time a 10-year supply. In today's market, it holds 13,325 lots, a 16-year supply. For the full year 2006, Dominion sold $13.7 million in land and recognized gains of $795,000. During the third quarter of 2007, it completed $1.2 million of land sales for which no gain or loss was recorded.

According to documents filed with the Securities and Exchange Commission, Dominion has little cash on hand and roughly $245 million in debt. In October 2006, $213 million (or 73%) of the company's debt was sold to hedge funds. Since the beginning of 2007, there have been five amendments to a credit agreement established last December that continues to increase the overadvance facility. Under the newest terms, the credit agreement has been modified to allow the company to, "borrow up to the lesser of $11,000,000 in excess of the borrowing base limitation, or an amount equal to $211,000,000 minus the aggregate principal of the company's term loans and revolving loans outstanding under the credit agreement."

Dominion, based in Dublin, Ohio, currently stands in violation of several of its financial covenants including minimum EBITDA, minimum gross profit, minimum net worth and minimum free cash flow. In a 10-Q filed last month, the company acknowledged "It is likely that we will not satisfy those current covenants as well as the leverage ratio covenant in future quarters."

In November, the company alluded to discussions regarding a possible takeover or privatization in an SEC filing. "Issuer and lender have begun discussion regarding a possible recapitalization or similar transaction whereby indebtedness under the credit agreement would be reduced. Any such transaction could include a debt for equity swap, or a going private or similar transactions in which the reporting persons and the other lenders under the credit agreement would acquire additional equity in issuer. Any such transaction could result in the reporting persons and such lenders together obtaining such number of shares that would constitute control of issuer."

On December 17, the company also received official notification from the NASDAQ because the company is not in compliance with requirements to continue its listing on the stock exchange. The violation occurred because the common stock had not maintained a minimum market value of publicly held shares of $5 million for the previous 30 consecutive trading days.

Dominion has until March 17 to demonstrate compliance or it will receive notification of delisting. According to the SEC document, "the company intends to monitor the market value of its listed securities and consider available options if its common stock does not trade at a level likely to result in the company regaining compliance with the minimum market value of publicly held shares requirement by March 17, 2008."