TOUSA Hires Advisor to Explore 'Restructuring'

Homebuilder Technical Olympic USA [TOUSA] said Wednesday it has retained the services of Kroll Zolfo Cooper LLC to "explore its long-term business plan and restructuring options." The announcement comes one day after TOUSA said it would delay reporting third-quarter results. In early October, TOUSA hired financial advisors Lazard Freres & Co to help restructure its $1.6 billion in outstanding debt. In mid-October, a creditor for more than $1 billion in TOUSA senior debt hired a law firm purportedly to assess the possibility of a bankruptcy filing. In late October, TOUSA amended two loan agreements to restructure its mounting debts, and said it expects significant Q3 land impairment charges amidst deteriorating market conditions. TOUSA reported second-quarter losses of $132 million, and $66M losses in Q1. Fitch Ratings recently downgraded the company's issuer default rating, saying a turnaround was 'unlikely'. Tousa operates in Florida, the Mid-Atlantic states, Texas and the West, areas hard-hit by the housing slump. Shares have lost over 90% of their value this year. TOUSA said in a statement it "faces many challenges and is considering all available restructuring and reorganization alternatives." One industry analyst has speculated a bottom for the homebuilders will come when "more mortgage companies will declare bankruptcy and at least one major homebuilder will go under," (full story). Shares fell 10.3% Wednesday.

Sources: Press release, Thomson Financial, TheStreet.com, Reuters I, II, BuilderOnline, South Florida Business Journal, Trading Markets
Commentary: Homebuilders : Hell Fights Back • Can You Judge A Homebuilder By Its Book Value?
Stocks to watch: TOA. Competitors: DHI, PHM, KBH, TOL, HOV. ETFs: XHB, ITB

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