FACING INVESTIGATIONS
Beazer tries to block creditors
Company: Investors plotting to force quick payment on bonds.
Beazer Homes USA asked a federal court Tuesday to prevent what it described as a plot by some of its creditors to take money it needs to operate.
The villains? ''Various hedge funds and other opportunistic investors,'' Beazer said.
The plot? The company said those investors planned to seek a declaration as soon as Friday that it has defaulted on up to $1.3 billion in loans. It said those investors hoped to ''secure a windfall'' by forcing accelerated repayment.
Such payments would ''unconscionably divert funds,'' Beazer said, causing ''significant and irreparable harm.''
The Atlanta company, one of the nation's largest homebuilders, is increasingly threatened by its own investors.
Many homebuilders are losing money. Beazer is burdened by a federal criminal investigation of its mortgage arm, a formal inquiry by the Securities and Exchange Commission, and lawsuits filed by customers, employees and shareholders.
Most recently, it delayed a report on its financial condition citing uncertainty about the accuracy of its past reports.
Left vulnerable by its past conduct, the company now faces an unorthodox penalty.
In an increasingly common gambit, aggressive investors snapped up the company's bonds. Now they will try to convince a court that the missed deadline means Beazer has defaulted on its obligations to them.
The resolution? An analyst for Lehman Brothers wrote last week that the investors don't want instant payment, which would force Beazer into bankruptcy. Instead, the company likely will pay them a special fee in exchange for patience.
Advocates for this kind of tactic say it holds companies accountable for misconduct. Critics, including Beazer as of Tuesday, contend it's just blackmail by another name.
Beazer's problems began with a March series in The Charlotte Observer charting a litany of misconduct in the sale of homes in the company's Charlotte-area developments.
Several regulators announced investigations. The company has responded with an ongoing series of confessions.
The one most relevant to its current predicament: It said this summer that its former chief accounting officer, fired for trying to destroy documents, had also messed with its books, raising the possibility of problems with its past financial reports.
That led Beazer to delay its quarterly filing with regulators, which led in turn to Tuesday's plea for more time.
In a filing with the U.S. District Court for the Northern District of Georgia, Atlanta Division, Beazer asked a judge to declare that it does not face a Friday deadline for filing its financial reports.
Beazer tries to block creditors
Company: Investors plotting to force quick payment on bonds.
Beazer Homes USA asked a federal court Tuesday to prevent what it described as a plot by some of its creditors to take money it needs to operate.
The villains? ''Various hedge funds and other opportunistic investors,'' Beazer said.
The plot? The company said those investors planned to seek a declaration as soon as Friday that it has defaulted on up to $1.3 billion in loans. It said those investors hoped to ''secure a windfall'' by forcing accelerated repayment.
Such payments would ''unconscionably divert funds,'' Beazer said, causing ''significant and irreparable harm.''
The Atlanta company, one of the nation's largest homebuilders, is increasingly threatened by its own investors.
Many homebuilders are losing money. Beazer is burdened by a federal criminal investigation of its mortgage arm, a formal inquiry by the Securities and Exchange Commission, and lawsuits filed by customers, employees and shareholders.
Most recently, it delayed a report on its financial condition citing uncertainty about the accuracy of its past reports.
Left vulnerable by its past conduct, the company now faces an unorthodox penalty.
In an increasingly common gambit, aggressive investors snapped up the company's bonds. Now they will try to convince a court that the missed deadline means Beazer has defaulted on its obligations to them.
The resolution? An analyst for Lehman Brothers wrote last week that the investors don't want instant payment, which would force Beazer into bankruptcy. Instead, the company likely will pay them a special fee in exchange for patience.
Advocates for this kind of tactic say it holds companies accountable for misconduct. Critics, including Beazer as of Tuesday, contend it's just blackmail by another name.
Beazer's problems began with a March series in The Charlotte Observer charting a litany of misconduct in the sale of homes in the company's Charlotte-area developments.
Several regulators announced investigations. The company has responded with an ongoing series of confessions.
The one most relevant to its current predicament: It said this summer that its former chief accounting officer, fired for trying to destroy documents, had also messed with its books, raising the possibility of problems with its past financial reports.
That led Beazer to delay its quarterly filing with regulators, which led in turn to Tuesday's plea for more time.
In a filing with the U.S. District Court for the Northern District of Georgia, Atlanta Division, Beazer asked a judge to declare that it does not face a Friday deadline for filing its financial reports.
