Standard Pacific planning to pay down revolver by year end

By Jennifer Lanning Drey

Portland, Ore., April 27 - Standard Pacific Corp. intends to pay off the balance on its revolving credit facility before the end of the year using cash generated by reducing homebuilding inventory levels, chief executive officer Stephen J. Scarborough said Friday during the company's first-quarter earnings conference call.

The company reported approximately $270 million drawn on the revolving credit facility at March 31.

"We have adjusted our strategy to focus on strengthening our balance sheet and improving our liquidity," said Andrew H. Parnes, Standard Pacific's chief financial officer, during the call.

The company ended the first quarter with cash and cash equivalents of $3.84 million, compared to $17.38 million at Dec. 31, according to a company news release.

After reporting a net loss of $40.8 million for the first quarter, compared with net income of $94.8 million for the same quarter last year, the company said it is working to position itself to weather the downturn in the housing market.

"While the outlook for housing is extremely uncertain at this point, we believe we are taking the appropriate measures to manage our business through this cycle. We will continue to refine our pricing strategy to find the right balance between profitability, volume and cash flow generation," Scarborough said.

Additionally, Scarborough said Standard Pacific is managing new home starts, while reducing outlays for new land acquisitions, with the goal of reducing leverage.

The company's total debt-to-capital ratio for the first quarter was 54.7%.

The executives also reported that as part of its efforts to manage business during the downturn, Standard Pacific has completed a nearly two-year extension of its revolving credit facility, which now has a maturity date of May 2011.

In addition, they said the company has amended the facility to provide increased flexibility with respect to its interest coverage ratio covenant.

Standard Pacific is an Irvine, Calif.-based new homebuilder.

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