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alstry (< 20)

What is SPF's plan????



April 12, 2008 – Comments (3)

The only fact in evidence on March 21 regarding the departure to retirement of Stephen J. Scarborough from the CEO post at Standard Pacific Corp. (NYSE:SPF) on March 20, and his replacement with independent director Jeffrey V. Peterson, was that the move was sudden....

The fear of many investors in the company's common stock was evident in a question regarding whether the company was considering filing for bankruptcy protection, asked during a hastily arranged conference call with the company's new management team. Peterson responded, "I don't think it's appropriate to comment on that at this time on this call."

Standard Pacific is among the most heavily leveraged public companies in the home-building space, with a debt-to-backlog ratio of nearly 6 to 1..."We have been unable to maintain compliance with the financial covenants contained in our debt instruments.".

It also has significant, off-balance sheet exposure to joint ventures; it is the second among the big public building companies. 2005, when the company partnered with St. Paul Insurance and IHP in the 1,240- acre Black Mountain Ranch project in San Diego.

In 2005, Big Builder reported on the unusual structure of the Black Mountain Ranch deal: The hitch was that St. Paul wanted to continue to be an investor after it sold the property and also required rather unorthodox payment terms that entailed letters of credit for six years. "Other builders thought those terms were unwieldy, but Standard Pacific saw an enormous opportunity," said Doug Neff of IHP Capital Partners.

SPF lost hundreds of millions of dollars last year.  It is running out of cash and owes billions.  It is now being forced to spend millions on its Black Mountain Ranch development.  The other builders in the development are financially strapped.  Although in the public presentations SPF identifies the limited dollars invested in the community thus far, it failed to provide the amount it will be required to spend to build out guaranteed by millions and millions in letters of credit.  These letters of credit are in guaranteed by the revolver lenders IN ADDITION to the amount outstanding on the revolver.

Take a look at these spec houses SPF's has just started to build that won't be completed until the end of Summer.  Who in their right mind would be buidling so many spec houses in this environment?

And S&P forecasts that house prices in SPF's communities will not decline in 2008 and recommending a $7.50 price target?  Didn't S&P just forecast that house prices will continue to decline.  Is S&P the same company as S&P? 

With cash draining quickly, losing hundreds of millions of dollars per year, HUGE obligations to keep spending building out communities, owing billions to creditors, JVs blowing up everywhere, owing vendors millions, paying executives large salaries, bunuses and severence packages, and liquidating inventory at pennies on the dollar, what has SPF's plan been for the past year?

To hose shareholders and creditors and pay management wonderful compensation packages including bonuses?

3 Comments – Post Your Own

#1) On April 12, 2008 at 12:42 PM, alstry (< 20) wrote:

15% Unemployment in the Bag?????

In response to historically high fuel costs, Sun Country Airlines on Friday cut 28 full-time and 97 part-time jobs at the low-fare carrier -- about 11 percent of the workforce.

We currently have over 5% unemployment.  Companies all over America are reducing their workers by 10% or more.  AMD announced a 10% cut last week.  Wall Street said to be laying off 35%.  Construction companies laying off 50% or more.

Many companies are going bankrupt laying off everyone, 100%. 

We are already running at the highest budget deficit in history.  Just wait and see how high the deficit is going to be when all those expected tax revenues never come in.  How many people do you think local, state, and federal government is going to lay off?

What do you think that will do to foreclosure rates as unemployment gets higher and higher?

As people are forced to cash out of their retirement accounts, what will happen to the stock market?

As people are forced to use savings to live on, what will happen to banks with little money to lend?

If banks stop lending, what will even more slowing to our economy do to employment?

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#2) On April 12, 2008 at 12:49 PM, alstry (< 20) wrote:


April 11 (Bloomberg) -- They're talking more about Chapter 9 municipal bankruptcy in Jefferson County, Alabama, the home of the largest city in the state, Birmingham.

Who can blame them?

The county is now being whipsawed by an ill-thought-out debt policy and the collapse of the bond insurers. Credit-rating downgrades all around have triggered a series of events that are no longer in the county's control, leaving it at the mercy of securities firms that have little room for maneuver themselves.

This has produced a steady series of stories in my new favorite newspaper, the Birmingham News, all about how the county is preparing to declare bankruptcy any day.

Perhaps the best article ran on Sunday, April 6. It began: ``Jefferson County officials have laid the groundwork for the largest municipal bankruptcy in the nation's history while publicly saying they have no imminent plans for a filing.''

Is Jefferson  County like SPF??????

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#3) On April 12, 2008 at 9:43 PM, alstry (< 20) wrote:

ITS COMING!!!!!SOON?????????

Yuba-Sutter's unemployment rate weighed in at 12.2 percent — the third highest among U.S. metro areas...Sierra Cedar Products LLC, a Yuba County sawmill, shut down March 28, leaving 70 people out of work. Owners of a number of small retail stores also have given up.
[Erma] Olivio was laid off Nov. 29 after the patio-cover maker she worked for in Sacramento saw several months of plummeting sales. She has been unable to find another job that pays enough to keep up with her mortgage payments...Olivio says she is coming to terms with the fact that she could soon lose at least one of her two homes. The value of the house she lives in has decreased by roughly a third since she bought it two years ago. And she recently had to lower the rent on another property she owns in order to keep it occupied.



[The] retail community in growing like a patch of wildflowers. The town of 3,000 has seen six new restaurants open in as many months. Also new: a bank branch, a Curves fitness center for women, a drive-through coffee kiosk, and Rodriguez's flower shop....

Cory Bartholomew, publisher of the town's community newspaper, the Wheatland Citizen, is a bit less optimistic. "We suddenly added all these businesses, and at the same time," he says, "the economy has slowed down." "I'm concerned," he says. Especially unrealistic, he says, is the number of restaurants now competing for the small community's dollars.

"It's difficult without a commensurate growth in population," Bartholomew says. Wheatland currently has a few thousand residential parcels that have seen little or no construction activity for the past two years. Owners are waiting for the housing market and construction industry to turn around.

The above articles were orignally compiled by:

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