Macro Tsimmis

intelligently hedged investment

Beazer Homes (BZH) update #3

Posted by intelledgement on Tue, 23 Oct 07

Tentative conclusion: vultures might like sugar, but not in so limited quantities.

Beazer Homes (BZH) management significantly sweetened their offer to investors holding $1.525B of the company’s debt today, increasing the consent fee from up to $5/thousand to up to $12.50/thousand (exact amount to be paid depends on how many bondholders accept the offer) and adding limitations on corporate borrowing until the compay’s finances improve. In return, management want the bondholders—whom they termed “vulture investors” in court papers filed last August in a related case—to agree to waive any claims of default against Beazer stemming from the company’s failure to file their quarterly reports with the SEC.

Management have stated they cannot file the reports due to the uncertainly attendant to ongoing internal, SEC, and DOJ investigations concerning certain business practices and transactions.

The waiver management are asking for runs until 15 May 2008, but after that the bondholders’ recourse should the company fail to file “in a timely fashion” would be limited to annual penalties of 50 basis points.

The deadline for bondholders to respond has been extended two days to Friday.

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