Orleans Homebuilders is struggling to stop a potential cascade of events that could erode its financial structure by early December, leaving it with no operating cash.

The company announced Nov. 5 that it has negotiated another waiver and extension on its $375 million line of credit that will continue to give the company a borrowing base and relief from covenant violations through Nov. 30 while it negotiates a more permanent deal with its lenders on the line of credit that is set to mature Dec. 20.

"The company continues to work actively with its lenders to obtain an amendment to the existing $375 million credit facility and extension of the Dec. 20, 2009, maturity date of the facility," Orleans said in the announcement.

But it's not promising that it will be successful with that or in finding other financing if the efforts fail. If that happens, it will run out of cash by the end of November. Also, it will owe "significantly" more on the loan than it is allowed to borrow. It also won't be able to pay the loan fees earned by the lenders, and that would make it likely that it would violate minimum liquidity requirements on the loan by early December, causing more covenant violations.

"The company will likely not have sufficient liquidity to continue its normal operations at that time (or shortly thereafter)," the announcement said.

Because of the uncertainty, Orleans said it did not make a $639,000 quarterly payment due Sept. 30 on its $30 million 8.52% trust preferred securities, which puts it in default of that loan and gives the lenders the right to ask for full payment right away. It also did not make a $235,000 quarterly payment due Oct. 20 on its new $75 million in junior subordinated notes put in place last August. Those lenders, too, would have the right to ask for their money back plus remedies after Dec. 1.

In addition, the New York Stock Exchange has sent the company notice that it is not in compliance with its continuing listing criteria because it failed to file a timely annual report for the fiscal year ending June 30, 2009. Orleans says it plans to send the exchange a plan by Nov. 16 promising to be in compliance by Feb. 2, 2010.

"As previously reported, the company could not timely file its Form 10-K without unreasonable effort or expense," the company wrote, adding it hopes to comply in December.