Va.-based homebuilder seeks bankruptcy protection NVR pledges to honor contracts to build houses

April 07, 1992|By Ellen James Martin | Ellen James Martin,Staff Writer Bloomberg Business News and Dow Jones News Service contributed to this article.

NVR L.P., a Virginia-based homebuilder with more than 400 Baltimore-area customers under contract to buy new houses, filed yesterday for Chapter 11 bankruptcy protection for itself and some of its subsidiaries.

But NVR executives said that the bankruptcy filings should not affect those who have contracts for houses, because of agreements with creditors and bondholders.

"We fully intend to honor our obligations -- to build, complete, service and warranty the homes in the same way we've done prior to this time," said Robert J. Coursey, the Ellicott City-based director of marketing for Ryan Homes, a subsidiary of NVR, with headquarters in McLean, Va.

The filings, made in Richmond, Va., did not involve the company's financial-services operations, including NVR Mortgage L.P. and NVR Savings Bank FSB.

Ryan and NVR's other homebuilding subsidiary, NVHomes, have customers under contract for houses. The regional builder, a publicly traded limited partnership, builds houses in the Baltimore-Washington area and in Richmond, Pittsburgh and upstate New York.

"Certainly, there's some degree of uncertainty as we wend our way through this financial restructuring process. But the uncertainties relate to details, not to the broad process of making this restructuring work," spokesman Douglas Poretz said.

He said NVR called all of its home-buying customers, suppliers and subcontractors Sunday to alert them to the financial restructuring program and Chapter 11 bankruptcy plan.

Mr. Coursey, the Ryan Homes marketing executive, said none of the customers contacted asked for a refund of the deposit. He said that if there are any future requests to back out of contracts, they will be considered by the company on a "case-by-case" basis.

Mr. Coursey said Ryan Homes has 29 subdivisions under construction in the Baltimore market. But, he said, construction and sales proceeded yesterday.

In late 1990, when NVR did not pay interest due on its publicly held subordinated debt and defaulted on its bank debt, it said it would open discussions with its principal bank lenders and a panel of some of its bondholders to develop a restructuring plan.

NVR owes $160 million to its principal bank lenders and has about $205 million of bonds outstanding.

NVR said it has developed a proposal for restructuring its bond debt that should bring agreement from the bondholder panel. The plan calls for the firm's outstanding bonds to be converted to equity.

NVR's senior and junior subordinated bondholders would receive 80 percent of NVR's fully diluted equity, with exchange rates to be set in the reorganization plan. The rest would be divided among the preferred unit holders, some creditors, management and public unit holders.

NVR also announced yesterday that it lost $16.4 million, or 54 cents a share, in 1991's final three months, compared with a loss of nearly $36 million, or $1.29 a share, a year earlier. Revenue fell to $201 million from $237 million in the same periods.

Three months ended 12/31/91

.. .. .. .. Revenue .. .. .. .. Net .. .. .. Share

'91 . .. .201,139,000 .. ..(16,372,000) ..(0.54)

'90 . .. .236,904,000 .. ..(35,990,000) ..(1.29)

% change .. .. .. 15.1 .. .. .. .. .. --. .. .. --

Twelve months ended 12/31/91

.. .. .. .. Revenue .. .. .. .. Net .. .. .. Share

'91 . .. .818,871,000 .. .. (36,721,000).. (1.28)

. ..1,081,399,000 .. ..(260,455,000).. (9.03)

% change .. .. .. 24.3 .. .. .. .. .. . --.. .. . --

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