Builder James M. Peters, whose once fabulously successful J.M. Peters Co. has been pummeled by the housing recession and the thrift-industry debacle, has assured shareholders that he will remain with the firm at least until federal regulators find a buyer for the 86% of the company once owned by insolvent San Jacinto Savings in Houston.
The Peters Co. has been liquidating unsold inventory and raw land at distress-sale prices to pay off nearly $100 million in overdue construction loans. Founder Peters is considered by many in the industry to be the only truly valuable asset that the company has left.
Peters, whose employment contract expired Feb. 28, said in a brief interview this week that he has not signed a new contract but has agreed to "remain with the company until San Jacinto's stock can be sold and a new direction for the company is formulated."
Peters would not say whether he intends to be part of that new direction, but others in Orange County's close-knit home-building industry insist that he is actively negotiating with the Resolution Trust Corp., the federal agency that runs San Jacinto under a conservatorship, to re-acquire control of the company he founded in 1975.
While San Jacinto's stake in the luxury home-building firm was valued at $100 million in 1988, that value has shrunk drastically with the subsequent collapse of the thrift industry and financial problems at the Peters Co.
Peters sold the company to San Jacinto in 1985 for $40 million and a profit-sharing agreement that earned him more than $12 million in bonuses in the late 1980s.
The company specializes in luxury homes priced between $300,000 and $750,000, primarily for buyers with equity from earlier residential investments.
There won't be any profit-sharing this year, however. The high end of the market was the first and hardest hit when home shoppers zipped their pocketbooks shut and walked away, beginning in late 1989.
Industry analysts and other builders say that Peters put so many amenities into his homes that his profits were not as large as some latecomers to the luxury-home market, who were able to cut prices and still remain profitable.
And on top of that came the collapse of San Jacinto Savings.
As a result, the Peters Co. will likely post a significant loss for its fiscal year that ended Feb. 28.
For the first nine months of the fiscal year, the company posted a loss of $6 million, contrasted with a $14.2-million profit for the first nine months of fiscal 1990.
In the fiscal 1991 third-quarter financial report it filed with the Securities and Exchange Commission, the Peters Co. said its cash reserves were at "a critical level" and that the company had defaulted on $98.7 million in construction and operating loans.
Peters said this week that none of the lenders have filed default liens and that the company has renegotiated credit and loan terms with two of them, Security Pacific National Bank and Home Federal Bank. He said the company is negotiating with four other lenders that have notified the company of defaults on all or part of its loans.