After 14 months of restructuring, the industry's fourth largest private builder has emerged from Chapter 11 bankruptcy.
A California bankruptcy court officially blessed Utah-based Woodside Group's reorganization plan, which included an overhaul of the company's ownership, management, and financing structures, on Dec. 31, 2009. Woodside, parent company to Woodside Homes and numerous other affiliates, voluntarily filed for Chapter 11 bankruptcy protection with the U.S. Bankruptcy Court for the Central District of California in mid-September 2008, after five insurance companies and a 15-member bank group filed paperwork to force the company into involuntary bankruptcy in an attempt to recover more than $800 million in collective debt.
Under the terms of the plan, newco P.H. Holding LLC replaces Woodside Group as the organization's parent company, although the company will continue to sell homes under the Woodside Homes brand. The move effectively wipes out Woodside's existing ownership structure, giving select creditors nearly all the equity in the reorganized company. Prior to the new plan, approximately 95% of Woodside's shares were controlled by a tight-knit group that included three senior officers and managers--company founder Ezra Nilson, Leonard Arave, and Scott Nelson--and a number of Nilson's relatives and related trusts.
In addition, Joel Shine, formerly of American Beauty Homes and CityView, takes over as company CEO, as well as a member of the company's board of directors. Shine had been involved with the bankruptcy case on a consultative basis since March, when he began serving as operational advisor to the official committee.
Shine is joined on the board by David Keller, former senior vice president, CFO, and treasurer of TOUSA; Mark Porath, co-founder and president of real estate investment firm Hearthstone; David Barclay, former president of Centex's national land division and western region and co-COO; and Michael Short, managing director of John Hancock's bond and corporate finance group.
With seemingly the worst behind the company, Shine told Big Builder that he and the rest of the management and operations team are focused on "putting together a strategic plan" for the company, which despite its Chapter 11 status has continued to sell and build homes throughout the process. Shine expected to have a detailed go-forward plan ready in the next 30 to 60 days.
But what those marching orders will be is anyone's guess at the moment.
"This is in many ways a new company," Shine explained during an interview.
However, Shine appeared optimistic about the company's future, saying the company is emerging with a "much stronger" balance sheet and a talented operations team, led by COO Chip Nelson, in place to help regrow the company. In addition, the company has secured $315 million in 10% senior notes due in 2012, according to court documents; Wells Fargo is acting as trustee and collateral agent.
When asked if the strategic plan might include taking the company public, Shine responded, "Absolutely."
"We're not ruling anything out," he added.
The company's new ownership structure also has many industry watchers speculating that a sale of the company could be in the cards. "The company's owned by lenders and insurance companies," said one public builder CEO. "They're not going to want to be operators."
However, Shine dismissed the comment, saying that such industry rumors were being fueled by both the public builders' need to refill their lot inventory and the shortage of finished lots in good locations.
"At this time, the company is not for sale," he said.