TOUSA Completes New Financing and Global Settlement in Transeastern Joint Venture


HOLLYWOOD, Fla., Aug. 1, 2007 (PRIME NEWSWIRE) -- TOUSA, Inc. (NYSE:TOA) said today that it has completed a previously announced $500 million term loans credit facility underwritten by Citigroup Global Markets Inc., together with certain of its affiliates ("Citi"), and used the funds to finalize and close the global consensual settlement with all participants in the Transeastern JV including the JV's senior lenders, its mezzanine lenders, the JV partner and its land bankers.

"With the completion of our financing and the global settlement, we can put the Transeastern JV issues behind us. Having eliminated the cost, management distraction, and potential adverse outcome of protracted lender litigation, we can now focus all of our efforts on operating in this difficult housing market, strengthening our balance sheet and enhancing value for TOUSA stakeholders," said Antonio B. Mon, President and Chief Executive Officer of TOUSA.

"Much hard work remains for us to execute our plan to de-leverage our balance sheet and actively manage our assets during one of the most challenging housing markets in many years," he said. "Our associates understand our objectives and are experienced and capable of meeting the challenges posed by the current difficult market conditions while preparing for an eventual housing recovery."

The global settlement, which will end all litigation with the Transeastern JV lenders, was financed by TOUSA's issuance of new equity and debt securities including a $500 million senior secured credit facility, made up of (i) a new $200 million aggregate principal amount first lien term loan facility and (ii) a new $300 million aggregate principal amount second lien term loan facility. The first and second lien term loans ("the Facilities") will be used to fund the settlement in the following manner:


 * $335 million repayment of the Transeastern JV senior term debt
 * $65 million repayment of the Transeastern JV revolver debt
 * $51 million to purchase certain Transeastern JV land bank assets
 * $36 million of interest, financing fees and expenses
 * $13 million as cash on the balance sheet

The Company also issued to Transeastern JV's senior mezzanine lenders $20 million in aggregate principal amount of 14.75% Senior Subordinated PIK Election Notes due 2015 and 8% Series A Convertible Preferred PIK Preferred Stock with an initial aggregate liquidation preference of $117.5 million. The Preferred Stock is convertible into common stock at a conversion price which shall initially equal the average closing common stock price for a 20 trading day period commencing October 1, 2007 (the "Measurement Period") multiplied by 1.40, subject to numerous previously described terms.

Additionally the Company issued warrants to Transeastern JV's junior mezzanine lenders to purchase shares of its common stock. The warrants have an estimated fair value of $16.25 million at issuance, subject to certain previously described terms.

The Company's existing $800.0 million revolving loan facility (the "Revolving Loan Facility") has been amended and restated to reduce the revolving commitments by $100.0 million and permit the incurrence of the Facilities.

The Revolving Loan Facility establishes new financial performance covenants with TOUSA that differ from prior covenants. The new covenants establish minimum tangible net worth requirements, maximum total leverage ratios, minimum interest coverage ratios, total land to adjusted tangible net worth ratios, maximum unsold units to units closed ratios, and maximum land supply ratios.

The Company will file an 8-K with the SEC which contains the final terms of the new debt and equity securities, as well as the amended credit terms and covenant descriptions.

As previously announced, the Company's certificate of incorporation has been amended to increase the authorized number of common shares from 97 million shares to 975 million shares. Of the new total shares authorized, 891 million reflect the maximum amount of shares that may be deliverable upon conversion of the Preferred Stock in 2015 using broad-based "worst case" assumptions (or a common stock price of $0.18 per share) described in the 8-K and the Company's June 29 press release.

The Company expects to issue a significantly lesser portion of the newly authorized shares. By way of example, if the average trading price of the common stock (the "Common Stock") during the Measurement Period equals the closing price of the Company's Common Stock on the New York Stock Exchange on July 31, 2007, which was $2.86 per share, the conversion price of the Preferred Stock would be $4.00 which would result in a maximum number of 55.6 million shares of Common Stock deliverable upon conversion of the Preferred Stock, assuming that all dividends are paid in additional shares of Preferred Stock, and that none of the shares of Preferred Stock issued is converted prior to 2015. The Company cannot predict what the trading price of its Common Stock will be during the Measurement Period or what the impact of the global settlement will be on the trading price of its Common Stock. As of March 31, 2007, the Company's Common Stock had a book value of $11.89 per share.

Mr. Mon said, "We truly appreciate the support of Citi and all of our lenders and the confidence they have shown in our ability to manage the business and execute our de-leveraging strategy. Completing this new financing in the face of current market conditions is testimony both to the long-term fundamental strength of TOUSA and the hard and effective work of our lenders."

As previously announced, the Transeastern JV has been merged into one of the Company's subsidiaries and has become a guarantor on the Company's credit facilities and note indentures. TOUSA is acquiring control of approximately 5,000 additional homesites in Florida, of which 4,000 are owned (after the take down of approximately 1,300 homesites with an asset value of $51 million) and approximately 1,000 homesites are under option (after walking away from approximately 2,450 homesites that no longer made financial sense). The Transeastern JV business will be fully integrated into the Company's Florida business and will market homes under the Engle Homes brand, one of the most recognized and respected homebuilding brands in the nation.

The Company also said that it continues to cooperate with the previously announced informal inquiry by the Miami Regional Office of the SEC, relating primarily to corporate and financial information and communications related to the Transeastern JV. The SEC has advised the Company that this informal inquiry should not be construed as an indication that any violations of law have occurred, nor should it be considered a reflection upon any person, entity, or security.

The Company plans to release its quarterly earnings after the close of the market on August 8, 2007, and host an earnings call on August 9, 2007 at 11:00 Eastern Time. At that time, the Company will discuss the financial implications of the recently completed transactions, as well as its plan to de-leverage the Company and strengthen its balance sheet.

Dial-In Information

Please dial 800-561-2813 (domestic) or 617-614-3529 (international) and use the pass code 15578637. Participants must dial in 5 to 10 minutes prior to the scheduled start time for registration.

Webcast Information

The earnings call will be webcast by CCBN and can be accessed through the Company's web site at www.tousa.com. Please allow 15 minutes prior to the call to download and install any necessary audio software.

TOUSA, Inc. is a leading homebuilder in the United States, operating in various metropolitan markets in 10 states located in four major geographic regions: Florida, the Mid-Atlantic, Texas, and the West. TOUSA designs, builds, and markets high-quality detached single-family residences, town homes, and condominiums to a diverse group of homebuyers, such as "first-time" homebuyers, "move-up" homebuyers, homebuyers who are relocating to a new city or state, buyers of second or vacation homes, active-adult homebuyers, and homebuyers with grown children who want a smaller home ("empty-nesters"). It also provides financial services to its homebuyers and to others through its subsidiaries, Preferred Home Mortgage Company and Universal Land Title, Inc. For more information on TOUSA, please visit our website at www.tousa.com.

The TOUSA, Inc. logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=1821

This press release contains forward-looking statements. The Company wishes to caution readers that certain important factors may have affected and could in the future affect the Company's actual results and could cause the Company's actual results for subsequent periods to differ materially from those expressed in any forward-looking statement made by or on behalf of the Company. This press release is qualified in its entirety by cautionary statements and risk factor disclosure contained in the Company's Securities and Exchange Commission filings, including the Company's annual report on Form 10-K for the year ended December 31, 2006, filed with the Commission on March 20, 2007 and the Company's quarterly reports on Form 10-Q date filed with the Commission after such date. We do not undertake any duty to update any forward-looking statement.


            

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