In his first quarterly earnings call since assuming the role of Standard Pacific's chairman, president, and CEO in late March, Jeff Peterson told analysts that the company is exploring a variety of strategic and financial alternatives that could include a "sale of equity, sale of debt, a merger, or a sale of the company," among other things.

Though the company was able to end the quarter with $328.8 million in cash, management spent the majority of its question-and-answer session focused on issues that have weighed heavily on the company: joint ventures and debt--specifically, a waiver extension that expires Wednesday, May 14, to credit facilities that are not in compliance. As of the investor call this morning, a final approval on an extension had not yet been completed.

Standard Pacific is among the most heavily leveraged public companies in the home building space. Its most recent 10K report, filed with the Securities and Exchange Commission for the 2007 fiscal year, stated matter-of-factly, "We have a significant amount of debt."

The company was not in compliance with the consolidated tangible net worth and leverage covenants contained in its revolving credit facility, $100 million Term Loan A, and $225 million Term Loan B as of March 31, 2008. During that month, management reached an agreement to extend a previous waiver of default arising from the non-compliance. At that time, the extension was granted until this coming Wednesday, May 14.

Last Friday, May 9, Stan Pac received preliminary consent for an extension from the bank group; but at the time of the call, no final approval had been granted. "We got a strong, positive response and anticipate that it will close tomorrow," said Peterson.

If approved, the waiver, which carries an expanded scope, will buy the company time until Aug. 14.

If completed, the new waiver will include a broader waiver of defaults arising from non-compliance with financial covenants and a suspension of the application of the borrowing base, certain representations required to be made in connection with requests for additional borrowings, and a cross-default provision regarding defaults of other agreements between the company and members of the bank group. This includes joint ventures.

In exchange for the extension and expanded scope, Stan Pac's concessions include a collateralization of any new advances made on the revolver. In addition, the company reduced the credit commitment from $700 million to $500 million and agreed not to borrow under the facility when cash on hand exceeds $300 million.

Adding to the financial strain, the company had $1.302 billion of senior and senior subordinated notes outstanding as of March 31, and is in violation of covenants related to leverage and interest coverage. As a result, the company's ability to incur further indebtedness is currently limited, although some strict "exceptions" are in place.

"Assuming that the company's bank group approves the proposed waiver extension, the company believes that these exceptions and its cash balance of $328.8 million at March 31, 2008, provide it with substantial resources and alternatives to fund its short-term cash needs," Stan Pac said in a statement.

In the meantime, the company has worked to mitigate the financial risk associated with its heavy exposure to joint ventures.

In today's call, management discussed a JV portfolio of 10 projects with a total leverage of 48% across the group. In the first quarter, Stan Pac was able to reduce its JV debt by $127 million to $644 million. And in a reflection of the company's "only appraisal experience," a $15.7 million loan remargin payment was triggered during the quarter to one of the JVs.

CFO Andy Parnes explained that the company was currently involved in unwinding five of its ventures. The company paid off its partner's interests and assumed the debt for the Three Oaks Walnut project and another in Ventura, Calif. "It did take some cash, but it won't detract from our ability to generate cash for the year," he said.

Parnes also explained the company is in negotiations to unwind an additional three unnamed JVs, though he didn't specify whether Stan Pac would be acquiring its partner's interests, disposing of the company's interest, or extricating itself through other means. One of the three is set to be completed this week, and he hinted that the other two may be completed in the next several weeks.

For the quarter, new-home deliveries were down 38% and closings were off in all of Stan Pac's markets. Regarding the company's overall footprint, Parnes noted that the company will continue to evaluate its markets but feels comfortable with its current positioning.