Orleans Puts Up a 'For Sale' Sign

BENSALEM, Pa. (TheStreet) -- Orleans Homebuilders(OHB), which earlier this week confirmed that it had received a de-listing notice from the New York Stock Exchange, announced an amended agreement with its lenders on Wednesday morning.

Orleans says that the amended $375 million loan agreement, which is expected to take effect on January 29, 2010, would ensure its short-term viability, providing adequate liquidity for operations over the next 12 to 18 months.

However, the juiciest items among the torturous legalese of the Orleans Homebuilders financial release were loan-term conditions linked to a potential sale of the homebuilder itself, a liquidation of all of its undeveloped land, and the fact that many of Orleans' 16 lenders have not yet approved the amended agreement.

If the lenders do not each vote to approve the amended agreement on or before December 20, the credit facility will mature on that date and Orleans will not have sufficient funds to repay amounts outstanding or continue normal operations. What's more, the long-term outlook for Orleans is bleak even with the new credit facility:

Orleans warned that it anticipates that even if it successfully enters into the amendment, without either a refinancing, recapitalization or outright sale within approximately 12 months from closing date, the homebuilder will be unlikely to have sufficient liquidity to continue its normal operations.

As for a sale of the homebuilder, the agreement says that there could be "a potential significant principal reduction or debt forgiveness by the lenders" if Orleans can either retire or refinance the entire restructured credit facility, or if Orleans can sell itself within the next 6 to 12 months.