Standard Pacific Corporation this morning (August 24) filed an 8K with the Securities and Exchange Commission detailing proposed revisions to its revolver and major term loan facilities that would cut its credit line by$225 million to a total of $1.15 billion and revise downward the value of the company for borrowing purposes.

The proposed revisions would reduce the company's leverage coverage ratio from 2.25x to 1.75x for the remaining two quarters of 2007 and the first two of 2008, 1.65x for the the third and fourth quarters of 2008, 1.50x for 2009, and 1.50x unless its interest coverage ratio is maintained at 1.75x for two consecutive quarters, in which case the leverage ratio may climb back to 2.0x.

Under the terms of its new credit agreements, the company would gain leeway regarding its interest coverage ratio. A ratio between 1.25x and 1.75x would be permitted for up to eight consecutive quarters during a one time "reduced interest coverage period," and it may fall to 1.00x in any of four quarters during that period. However, the company will be prohibited from any stock buybacks during the reduced interest coverage period.

Standard Pacific also would be prohibited from buying back stock if its consolidated tangible net worth breaches a $250 million cushion above a minimum that would be calculated on a quarter-by-quarter basis. The company would reduce its consolidated tangible net worth from the current $1.373 billion plus 50% each of net income for each quarter and of proceeds from any equity offerings.

The company would also be required to include additional information on joint ventures in its quarterly and annual financial reports.

The proposed changes detail a sliding scale that provides for rate premiums to be paid as the interest coverage ratio declines, from 25 basis points below the 1.75x threshold, 50 below 1.50x and 62.5 below 1.25X.