UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act Of 1934
Date of Report (Date of earliest event reported): November 26, 2008
Comstock Homebuilding Companies, Inc.
(Exact Name of Registrant as Specified in its Charter)
| Delaware |
1-32375 |
20-1164345 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
11465 SUNSET HILLS ROAD, FIFTH FLOOR
RESTON, VIRGINIA 20910
(Address of principal executive offices) (Zip Code)
Registrant’s Telephone Number, Including Area Code: (703) 883-1700
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a- 12 under the Exchange Act (17 CFR 240.14a- 12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 1.01 | Entry into a Material Definitive Agreement; |
On November 26, 2008, Comstock Homes of Atlanta (“CHOA”), Highland Avenue Properties, LLC (“Highland”) (collectively the “Borrowers”) and Comstock Homebuilding Companies, Inc. (the “Company”, the “Guarantor” and together with the Borrowers, the “Obligors”), entered into a Forbearance and Conditional Release Agreement (“Forbearance Agreement”) with Bank of America, N.A. (“BofA”) relating to approximately $5,723,000 of outstanding debts (the “Secured Debts”) owed by the Borrowers to BofA. Under the terms of the Forbearance Agreement, BofA agreed to release the Obligors from their obligations and guarantees relating to the Secured Debts (the “Release”) upon the earlier of completion of foreclosure proceedings by BofA on all collateral pledged to secure the Debts or February 15, 2009. The assets pledged include developed building lots, developed land and/or speculative single family homes at: Brentwood Estates, Senator’s Ridge and Highland Avenue, all single family home developments in Atlanta, Georgia (individually and collectively, the “Collateral”). BofA is expected to complete foreclosure proceedings on the Collateral on December 2, 2008. Upon completion of the foreclosures BofA will release the Obligors and the Secured Debts will be considered paid in full with no deficiency liability post foreclosure.
The Forbearance Agreement covers two loans from BofA to the Borrowers for which the Company is Guarantor. The loans include: a construction loan to CHOA in the original principal amount of $7,500,000 relating to the Brentwood Estates and Senator’s Ridge Collateral with $1,453,508 outstanding and an acquisition and development loan to Highland in the original principal amount of $4,851,235 relating to the Highland Avenue project with $4,269,364 outstanding.
On November 26, 2008, Comstock Homebuilding Companies, Inc. (the “Company”) entered into a Loan Modification Agreement (“Modification Agreement”) with Bank of America, N.A. (“BofA”) relating to approximately $3,100,000 of outstanding debts owed by the Company to BofA under the Company’s unsecured Revolving Line of Credit Note originally dated February 22, 2006 (the “Unsecured Loan”). Under the terms of the Modification Agreement, BofA agreed to extend the maturity date of the Unsecured Loan to December 28, 2018 and modify the payment terms associated with the Unsecured Loan. From the date of execution until January 28, 2010, the Unsecured Loan will accrue interest with no payments from the Company. On January 28, 2010 the Company will make a payment to BofA in the amount of the accrued interest. From February 28, 2010 until January 28, 2012 the Company will make monthly interest-only payments to BofA. Commencing January 28, 2012 until maturity the Company will make monthly principal and interest payments to BofA. In connection with the Modification Agreement the outstanding balance of the Unsecured Loan was increased to $3,591,988.
On December 1, 2008 the Company issued a press release announcing the debt restructurings. A copy of this press release is attached hereto as Exhibit 99.1.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
| Exhibit Number |
Description | |
| 99.1 | Press Release by Comstock Homebuilding Companies, Inc., dated December 1, 2008 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: December 2, 2008
| COMSTOCK HOMEBUILDING COMPANIES, INC. | ||
| By: | /s/ Jubal R. Thompson | |
| General Counsel and Secretary | ||
Exhibit 99.1
Press Release
Comstock Homebuilding Companies restructures
$8.8 million debt with Bank of America
Reston, Virginia (December 1, 2008) – Comstock Homebuilding Companies, Inc. (NASDAQ CHCI) and certain of its subsidiaries (collectively “Comstock” or the “Company”) announced that it entered into loan modification agreements with Bank of America, N.A. with respect to approximately $8.8 million of the Company’s debt.
Under the terms of a Forbearance and Conditional Release Agreement, the Company agreed to cooperate with Bank of America with respect to its foreclosure on certain of the Company’s Atlanta real estate assets and Bank of America agreed to provide the Company a full release from the $5.7 million of secured obligations associated with the subject properties. The foreclosure agreement covers the Company’s Highland Avenue, Brentwood Estates and Senator’s Ridge projects. Foreclosure is expected to occur on December 2, 2008. In advance of this agreement the Company recorded impairment charges related to the Bank of America collateral in the quarter ended June 30, 2008 and does not anticipate any material write-offs in connection with the foreclosures.
Under the terms of a Loan Modification Agreement, the maturity date of $3.1 million outstanding under the Company’s unsecured revolving line of credit note was extended ten years to December 28, 2018. The amended note will accrue interest until January 28, 2010 (no cash payments) at which time the Company will be obligated to commence making monthly interest-only payments until January 28, 2012 after which the Company will be obligated to commence making monthly principal and interest payments through maturity. There are no financial covenants under the amended unsecured loan.
“This is another milestone in our efforts to restructure a significant portion of our debt,” said Christopher Clemente, Comstock’s Chairman and Chief Executive Officer. “We are working hard with all of our lenders to negotiate loan terms that take into account current market conditions. We remain optimistic regarding the outcome of the ongoing negotiations.”
About Comstock Homebuilding Companies, Inc.
Comstock Homebuilding Companies, Inc. is a publically traded real estate enterprise with a focus on a variety of affordably priced, for-sale residential products. The company currently operates as Comstock Homes in the Washington, D.C.; Raleigh, NC; and Atlanta, GA markets. Comstock trades on Nasdaq as CHCI. For more information please visit www.comstockhomebuilding.com.
Cautionary Statement
This release may contain “forward-looking” statements made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Additional information concerning these and other important risks and uncertainties can be found under the heading “Risk Factors” in the Company’s Form 10-K as filed with the Securities and Exchange Commission on March 24, 2008. Comstock specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.