Beazer Homes USA's mortgage subsidiary has negotiated a major downsize in its warehouse line of credit from $100 million to $17.5 million, reducing the number of bank participants from eight to one -- Guaranty Bank.
In its SEC filing announcing the change, Beazer said it initiated the reduction "based on the low level of usage of the credit facility both currently and in the foreseeable future."
In addition to reducing its borrowing capacity, Beazer said it has also received waivers of potential defaults that could arise "from potential breaches of certain covenants and representations relating to matters underlying the previously disclosed Audit Committee investigation."
Beazer's lending practices are under investigation for potential fraud related to accusations that borrowers' financial information was misstated on applications. Beazer has repeatedly said that it originates, but does not underwrite loans.
Beazer says the its interest rate on its balance on the line of credit will remain based on LIBOR [London Interbank Offered Rate] plus a margin of 1% and that its maturity date of February 8, 2008 remains unchanged.
The line of credit is guaranteed by a letter of credit and not by the company itself or any of its subsidiaries.