The company’s senior lenders, a partnership of Colony Capital and Colony Financial, which loaned the builder $206 million two years ago, along with 65% of the holders of its notes and the Lyon family, have agreed to support a reorganization plan that would infuse the cash-poor company with $85 million and reduce its $489 million in debt by about 37%. The plan also reduces the builder’s heavy annual interest expense, which is $54.4 million, by about 45%, the company announced. The plan is expected to be completed by the end of the first quarter in 2012.
Under the agreement, the Lyon family would invest $25 million in return for 20% of the $10 million of new stock and 9.1% of the $50 million in new convertible stock.
In addition, Burney reported that the builder recently closed a sale on 27 acres in Palo Alto for development of around 300 residential units.