Tom Krobot sounds very different from most builders these days, as he speaks in a voice that reveals equal parts relief and optimism. 

“We are tickled pink about where we are,” says Krobot, CEO of Atlanta-based Ashton Woods USA, which recently announced that it had successfully restructured $125 million in senior notes with its lenders and bondholders, exchanging public debt for private debt and saving the company approximately $13 million annually in Securities and Exchange Commission fees and other associated expenses.

The deal marks the end of months of negotiations for Ashton Woods, whose parent company, the Great Gulf Group of Canada, also agreed to invest an additional $20 million in the builder. Essentially, the agreement exchanges the $125 million in old senior notes for new notes at a higher interest rate (11% versus 9.5%, although Ashton Woods is not required to pay interest for three years) and gives the bondholders a nearly 20% stake in the company.

“What was most surprising to me was the amount of participation of the bondholders” in the deal, Krobot says. The company wanted to redeem at least 90% of those senior notes; it received nearly 99%.

The restructuring also establishes a $95 million credit line for the builder. While the new credit facility does represent a cutback compared to Ashton Woods’ previous line of $200 million-plus, Krobot isn’t complaining. “This reduction is more in line with the business realities of the marketplace today,” he says.

In fact, that last piece represents a major step forward for the builder, which had been in default on its $200-million-plus credit facility since spring 2008. “We were not able to draw down that bank line from May,” Krobot acknowledges. “We ran on internal cash flow the entire time.”

As the housing and credit markets ran aground, though, Ashton Woods managed its cash flow carefully, continuing to pay its trade contractors and suppliers regularly every two to four weeks. “When our bondholders came in for due diligence, they said, ‘Tell me who hasn’t been paid,’” Krobot recalls. “We said, ‘No one. Everyone’s been paid.’”

The company has been bucking home building industry trends in other ways too. Sales are up 30 percent on an annual basis for the quarter ended Nov. 30, 2008, according to Krobot, who expects to sell 1,100 homes this year. Cancellation rates have plummeted from 45% one year ago to roughly 20%, which is far closer to Ashton’s historical levels. Capture rates for prospective buyers have soared, from 25% to 80% as sales associates have concentrated on asking for the sale.

Of course, like everywhere, there are fewer employees to do that at Ashton. The Atlanta builder has reduced its workforce three times, going from a peak workforce of 450 people to 225 today, according to Krobot.

The CEO says the company’s employees deserve much of the credit for the builder’s successful restructuring. “I didn’t do it—they did it,” Krobot says. “If they hadn’t performed the way they did the past six months, I don’t know if the bank would have agreed to extend the line or if the bondholders would have agreed to exchange the notes.”

Alison Rice is senior editor, online, at BUILDER magazine.

Learn more about markets featured in this article: Atlanta, GA.