A new woe has landed atop Orleans Homebuilders’ mountain of troubles. The New York Stock Exchange (NYSE) has notified the Bensalem, Pa.- based company that it will be de-listed from the exchange for not meeting filing requirements unless the builder takes “prompt corrective action.”
The NYSE told Orleans in a notice received Dec. 1 that it was out of compliance because the builder hasn’t filed a quarterly report on a 10-Q form for the end of its Sept. 30 quarter. It’s the second such notice Orleans has received. On Nov. 2, it was given the same warning for not filing a 10-K report listing its financials for its fiscal year that ended June 30.
Orleans had already notified the exchange that it hasn’t filed the required reports because it would have required “unreasonable effort and expense” and said it intends to comply by Feb. 2, 2010.
Garry Herdler, executive vice president and CFO of Orleans, did not return BIG BUILDER's calls Tuesday.
Losing its stock listing may be among Orleans’ smaller problems: The greater one appears to be running out of operating capital.
In November, the company announced that it was likely the company would not have the cash to keep operating past early December unless it was able to strike a deal with its credit line lenders. Orleans is out of compliance with its lending covenants on its $375 million credit facility.
Orleans said at the time that it was negotiating with its lenders to amend its covenants to bring it back into compliance. The company has not reported on the success of those negotiations.
Because cash was tight, Orleans said last month that 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.
The company 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.
Teresa Burney is a senior editor at BUILDER and BIG BUILDER magazines.