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 2, 2009 (October 30, 2009)
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 Material Definitive Agreement. |
On October 30, 2009, Comstock Potomac Yard, L.C., Comstock Station View, L.C. (collectively, the “Borrowers”) and Comstock Homebuilding Companies, Inc. (the “Company” or the “Guarantor”) entered into a First Amendment to Loan Agreement modifying its existing loan agreement (the “Modification”) with KeyBank National Association (the “Lender”) with respect to the $22.8 million outstanding principal under the Borrowers’ secured Potomac Yard and Station View project loan (the “Loan”). The key terms of the Modification adjust the interest rate to the higher of LIBOR plus 5.0% or the prime rate plus 2.0% subject to a LIBOR floor of 2.0%. In exchange, the Lender has agreed to increase the cash flow available to Borrowers from the Potomac Yard project through adjusted unit release provisions by providing Borrowers fifteen percent (15%) of the net sales price of sold units on a retroactive basis for all units settled on and after July 1, 2009. The unrestricted use by Borrower of a portion of the adjusted unit release proceeds is subject to the occurrence of certain conditions subsequent, and continued accelerated releases for the sale of future units is subject to the occurrence of additional conditions subsequent, including the restructuring of certain of the Guarantor’s unsecured indebtedness and meeting a cumulative minimum sales requirement of nine (9) units per quarter (the “Modification Covenants”). Failure to meet the Modification Covenants will not result in an event of default but may result in a reversion of the unit release provisions whereby the Lender will have the right to apply all of the net sales price of sold units to principal curtailment in accordance with the original Loan documents. The Modification also modified the release provisions for the Station View project; allowing for additional monies from the net sales price of the bulk sale of the Station View project, under contract on a contingent sale basis, to be made available to Borrower for the repayment of certain select indebtedness of the Borrowers and Guarantor, subject to a minimum release price to be paid to the Lender. The Modification also provided that any deficiency notes evidencing the unsecured indebtedness issued by the Company in satisfaction of foreclosure deficiencies from other lenders be fully subordinate to the Loan.
On November 2, 2009, the Company issued a press release announcing the Modification. A copy of this press release is attached hereto as Exhibit 99.1.
| Item 9.01. | Financial Statement and Exhibits. |
(d) Exhibits
| Exhibit Number |
Description | |
| 99.1 | Press Release by Comstock Homebuilding Companies, Inc. dated November 2, 2009. | |
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: November 2, 2009
| COMSTOCK HOMEBUILDING COMPANIES, INC. | ||
| By: | /S/ CHRISTOPHER CLEMENTE | |
| Christopher Clemente, | ||
| Chief Executive Officer | ||
Exhibit 99.1
NEWS RELEASE
Comstock Homebuilding Executes Loan Modification with Keybank to Provide Improved Operating Cashflow and Completes its Effort to Modify all Secured Loans Guaranteed by the Company
RESTON, VA, November 2, 2009 (MARKETWIRE via COMTEX) — Comstock Homebuilding Companies, Inc. (Nasdaq: CHCI) today announced that it and certain of its subsidiaries (collectively “Comstock” or the “Company”) entered into a loan modification with Keybank National Association (“Keybank”), completing its efforts to modify all of the secured loans that the Company has guaranteed. The loan modification amends an existing loan with a $22.8 million outstanding principal balance secured by the Company’s Eclipse condominium project and the Company’s planned Station View townhouse project (the “Loan”) in a manner that will immediately provide Comstock with improved operating cashflow from sales at the two properties.
The key terms of the modification increase the cash flow available to Comstock through reduced principal payments required by Keybank as condominium units are settled at the Eclipse project and through the sale of the Station View project land. The modification reduces the curtailment requirement from 100% of net proceeds to 85% of the net sales price of Eclipse condominium units, providing Comstock with cash equal to 15% of the net sales price as each condominium unit is delivered. The loan modification will be applied retroactively to all settlements occurring on or after July 1, 2009, resulting in an immediate cash infusion to Comstock.
The modification allows for continued receipt by Comstock of 15% of the net sales price of Eclipse condominium units provided Comstock satisfies certain conditions subsequent; including meeting a minimum sales requirement of nine (9) units per quarter on a cumulative basis, and satisfying certain other conditions with respect to certain outstanding unsecured indebtedness of the Company (the “Modification Covenants”). It shall not be deemed a default under the loan should Comstock fail to meet the Modification Covenants but may result in a reversion to the unit release provisions as previously set forth in the existing loan documents.
Recent sales at the Eclipse project have been sufficient to position the Company to meet the Modification Covenants with respect to unit sales through Q4 2009. The Company also has entered into a contingent contract covering the sale of the Station View land and expects that, provided the conditions of sale are met, the sale will be consummated in the first quarter of 2010. The Company continues to work diligently on satisfying the Modification Covenants related to the Company’s unsecured indebtedness.
The Modification also reduces the curtailment requirement applicable to the Station View project; providing for the payment of certain outstanding unsecured debts of the Company from the sale proceeds generated through the sale of the Station View land and thereafter reducing the curtailment requirement from 100% to 85% of the net sales price generated through the pending sale of the Station View project land, subject to a minimum release price to be paid to the Lender.
In exchange for the modified terms, Comstock agreed to adjust the interest rate to the higher of LIBOR plus 5.0% or the prime rate plus 2.0% subject to a LIBOR floor of 2.0%. The interest reserve provision of the loan was maintained providing Comstock a means for payment of debt service on the loan as modified without requiring operating cashflow to cover interest expenses.
“The agreement reached with Keybank provides us with an immediate cash infusion and gets us very close to completing our plan for stabilizing Comstock.” said Christopher Clemente, Comstock’s Chairman and Chief Executive Officer. “Sales at the Eclipse project have improved this year, giving us reason to believe that the terms of this loan amendment will facilitate ongoing enhanced cashflow from operations. This will help tremendously in our effort to position Comstock to rebuild shareholder value. We expect to report results for the third quarter on or before November 16, 2009, at which time we believe we will meet the shareholder equity listing requirement applicable to the Nasdaq Capital Markets. These recent accomplishments and continuing signs that the market downturn is easing in the Washington, DC metropolitan area gives us reason to once again be optimistic about our future.”
About Comstock Homebuilding Companies, Inc.
Established in 1985, Comstock Homebuilding Companies, Inc. is a publicly traded, diversified real estate development firm with a focus on a variety of for-sale residential products. The company currently actively markets its products under the Comstock Homes brand in the Washington, D.C. and Raleigh, N.C. metropolitan areas. Comstock Homebuilding Companies, Inc. trades on NASDAQ under the symbol CHCI. For more information on the Company or it projects please visit www.comstockhomebuilding.com.
Cautionary Statement Regarding Forward-Looking Statements
This release contains “forward-looking” statements that are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties that may cause actual future results to differ materially from those projected or contemplated in the forward-looking statements. Additional information concerning these and other important risks and uncertainties can be found under the heading “Risk Factors” in the Company’s most recent Form 10-K, as filed with the Securities and Exchange Commission on March 31, 2009. Comstock specifically disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.
Contact:
Jeff Dauer
703.883.1700