Orleans Homebuilders Announces Agreement On Non-Binding Term Sheet Relating To Extension And Modification Of Its Credit Facility

BENSALEM, Pa., Dec. 8 /PRNewswire-FirstCall/ -- Orleans Homebuilders, Inc. (the "Company") (Amex: OHB) announced today that on December 3, 2009, the Company agreed to a non-binding term sheet (the "Term Sheet") relating to a maturity extension and structural modification (the "Amendment") of the Company's $375 million Second Amended and Restated Revolving Credit Loan Agreement dated September 30, 2008 (as amended, the "Credit Facility").  The Company currently anticipates that the formal documentation relating to the Amendment will be completed, executed and become effective on or before January 29, 2010.  

Further, the Company and certain of its lenders have agreed in principle today on a limited waiver and amendment (the "Temporary Amendment") of the Credit Facility which generally provides, among other things, the Company with the ability, subject to compliance with conditions precedent and covenants, to borrow under the Credit Facility until approximately January 29, 2010 and to extend letters of credit issued under the Credit Facility to February 26, 2010.

The Term Sheet has been approved by the Company's Board of Directors, executed by the Company and has been recommended by certain lenders.  The Term Sheet contemplates significant structural and covenant changes to the Credit Facility, including a 24-month maturity extension; the  granting of additional collateral; certain material step-down requirements in the size of the Credit Facility which principal step-downs are generally coincidental with the required material land asset sales over the next 6 to 18 months, with the application of the net proceeds from the build-out and sale of work-in-process housing units over the next approximately nine months in certain of the communities that may be sold without the construction of new spec units in these specific locations, and future federal tax refunds, each as described generally herein.  The Term Sheet provides for a potential significant principal reduction or debt forgiveness by the lenders if the Company can either retire or refinance the entire restructured Credit Facility, or if the Company can recapitalize or sell the Company primarily within the next 6 to 12 months following the ultimate closing date of the Amendment, although realization of any principal reduction or debt forgiveness is subject to significant conditions, including recapture, as to which the Company can offer no assurance of satisfaction.  The Company believes that the Amendment, when completed in accordance with the Term Sheet, should provide the Company with adequate liquidity to continue its operations in the near term, including potentially for up to the next 12 to 18 months.