Banks Squeezing FloridaBuilder's WCI?
From today's earnings report:
The ratio of net debt to net capitalization increased to 83.3% compared with 65.5% at March 31, 2007 and increased from 80.5% at December 31, 2007. As of March 31, 2008, excluding $53.4 million in letters of credit, we had approximately $192.4 million available commitments under our senior secured credit facility which was further limited by borrowing base availability which was an estimated $115.0 million at March 31, 2008, plus $48.5 million of cash and cash equivalents. Due to our strategy of selling unsold completed inventory, the impact of impairments to our inventory, and the impact of significant reductions in inventory additions, our borrowing capacity may be limited by the availability determined through our borrowing base as calculated under the loan agreement, which is currently less than the available loan commitments. In addition, our lenders are currently obtaining appraisals on our properties in the borrowing base, and should the appraisals reflect values less than expected, our borrowing base capacity would be further limited, potentially resulting in the loss of additional borrowing capacity and/or mandatory prepayment obligations.
Why would the banks be getting appraisals if they weren't looking for an excuse to call the loan?