At a special shareholders meeting of Dominion Homes early Friday, a merger agreement was approved that allows a buyout group to acquire the financially troubled home builder.
The buyout group consists of companies affiliated with Silver Point Capital, L.P.; Angelo Gordon & Co, L.P.; and the builder's largest shareholder, BRC Properties Inc., which is controlled by company chairman Douglas G. Borror.
Roughly 91% of the shares voted were in favor of the merger, sealing the approval for an expected closing in June.
Dominion spiraled into the penny-stock category in 2007 after efforts to resurrect the struggling business were unsuccessful. Not only had Dominion gone long on owned land in its primary Columbus, Ohio, market during a run-up in 2003 and 2004, but the company was also facing a public relations crisis related to unethical sales and mortgage loan practices, documented violations, and unusually high foreclosure rates.
In January 2006, the Borror family, which is the company founder and majority shareholder, brought in William Cornely as CFO, followed in March by Pulte alum Jeffrey Croft as COO. The turnaround team was not successful in its effort to generate cash. In October 2006, $213 million, or 73%, of the company's distressed debt was sold to hedge funds Field Point and Silver Oak Capital.
Sales continued to plummet through 2007, and the company was unsuccessful in an effort to unload its land burden. By December, Croft was released from his position, and Cornely was named COO.
Since the beginning of 2007, there have been nine amendments to the credit agreement established in December 2006; with each, lenders have continued to increase the overadvance facility.
After hinting at the possibility of privatization in a November SEC filing, Dominion announced in January 2008 that it had entered into a definitive agreement to be acquired by a buyout group consisting of companies affiliated with Angelo Gordon &Co., L.P. and Silver Point Capital, L.P., as well as the company's largest shareholder, BRC Properties, Inc. The Borror family owns approximately 46.6% of Dominion's shares through BRC.
If completed by mid-year, the deal would meet a June 30 deadline set by lenders that agreed not exercise their right to declare default.