The Ryland Group Inc. announced yesterday that it will sell another 2 million shares of common stock in order to pay down debt and raise cash.
The Columbia-based homebuilder is following two other development firms into this spring's strong stock market, said Ed Horan, who follows the company for Prudential Securities in New York.
Although the company lost money in the first quarter, Ryland is coping with the downturn better than many other developers, who have been hit hard by the recession, Mr. Horan said.
"It's not that they need the money," Mr. Horan said.
He explained that because stock prices have been fairly high recently, companies have preferred to sell stock rather than borrow hard-to-find capital.
Catherine Campbell, a spokeswoman for Ryland, said the company would use some of the money to pay down its $8.4 million in current debt and perhaps retire some of its $169 million in long-term debt.
In addition, Ms. Campbell said, some proceeds will be used to help fuel growth of Baltimore's leading homebuilder.
"We are going to expand and increase activities," she said. Although the nation is still in the midst of a recession, "home sales are increasing and have been over last couple months," she said.
Ryland, which currently has 12,307,000 shares outstanding, saw its stock close 75 cents lower after yesterday's announcement, finishing the day at $20.125.
Although the announcement has been filed with the Securities and Exchange Commission, Ryland said it did not know when the offering would take place.