Faced with yet another quarter of hefty option deposit write offs and impairment charges that would have driven the company into noncompliance, TOUSA management successfully renegotiated terms on two credit agreements. However, how long the company can continue to hold off the dogs remains up for argument. Slip-sliding home prices and land values in the hard-hit Florida market have TOUSA lenders re-evaluating their risk with the company.

Calling the amendments "temporary relief" in an 8-K filing with the Securities and Exchange Commission, management noted that the company remains in precarious position with regard to indebtedness. The bulk of the company's debt relates to its 2005 joint venture to acquire the assets of Florida-based Transeastern Homes. The $857 million transaction was highly leveraged, as management grossly misjudged the asset value and paid hefty premiums on top of peak prices for lot control.

To reduce its debt to more manageable levels, the executive team is continuing its plan to liquidate assets. However, management said it's now also looking for equity deals to help generate funds to pay down debt.

Equity deals have continued to pop up as a solution for other troubled home builders facing a liquidity crisis. Levitt Corp. generated $153 million from an equity offering that gave existing shareholders the chance to buy up to 5.04 new shares for each share owned. Standard Pacific Homes completed an offering of $100 million in convertible senior subordinated notes, which allows investors to convert the bonds to cash or shares at a later date.

Management said it expects to meet with bondholders to discuss possible restructuring plans and reorganization alternatives. However, management's confidence in a solution appeared weak at best. In the filing, it stated, "The company may not be successful in achieving these alternatives, and the alternatives, if achieved, may not be successful."

In the meantime, an easing of terms with respect to the company's revolving credit agreement and a first-lien term loan gave the company a little wiggle room. Management renegotiated the pricing of the loans, as well as certain financial covenants. However, the amendment to the revolver also included a limit to the amount the company can borrow before year's end and new cash-flow requirements. In addition, management agreed to furnish weekly cash-flow reports, pay certain fees, and reduce lenders' commitments by $50 million.

However, this bit of positive news did little to buoy investor faith in the company. At the time of the announcement, the company's stock price slid another $0.04 to $0.85, a point at which the company could face the prospect delisting from the New York Stock Exchange.