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Capital Pacific Seeking to Buy J.M. Peters Co. : Acquisition: The home builder has won exclusive rights to negotiate for the purchase of the Resolution Trust-controlled firm.


NEWPORT BEACH — Capital Pacific Homes, a year-old firm headed by longtime Orange County builder Dale Dowers and former Washington construction magnate Hadi Makarechian, said Friday it has won exclusive rights to negotiate for the acquisition of the J.M. Peters Co.

Although all of the parties in the deal refuse to provide details--despite the Peters Co.'s status as a publicly owned firm--informed sources say Capital Pacific likely has offered to pay between $40 million and $50 million for the 86% share of Peters Co. controlled by the federal Resolution Trust Corp.

Dowers, in a brief interview, said that he cannot comment on any aspect of the deal because of a strict confidentiality agreement with the RTC. Peters Co. founder and Chairman James M. Peters said Friday he had not been informed of the agreement between the RTC and Capital Pacific. Peters declined further comment.

A spokesman for the notoriously closemouthed RTC in Washington refused to even confirm Capital Pacific's announcement, stating that no information would be released until a sale agreement was completed.

Control of the 17-year-old Peters Co., once the region's premier luxury home builder, was acquired by the RTC in 1990 when government regulators seized control of its majority shareholder, Houston-based San Jacinto Savings & Loan.

Although its fortunes have flagged because of the general recession and the collapse of its majority owner, the Peters Co. still controls a number of large residential developments in Orange, Los Angeles and San Diego counties.

Its book-value assets minus liabilities, however, has shrunk considerably because of mounting debt, tumbling from an estimated $142 million in early 1990 to about $25 million late last year.

For months the RTC had been trying to sell Peters Co. for about $140 million, but received no bidders.

Industry insiders speculate that the current price being negotiated is as high as $50 million because it takes into account the future value of the Peters Co.'s homes and raw land.

San Jacinto acquired the Newport Beach home-building firm in 1985 in a deal that netted Peters more than $21 million.

In 1987, San Jacinto took the company public, raising about $12 million with the sale of 2 million shares--14% of the company's stock--at $6 per share. The stock is traded on the American Stock Exchange and hit a high of $14.78 a share during the building boom of the late 1980s.

But since the collapse of San Jacinto in 1990 and the RTC's decision to slash Peters Co.'s credit line, the stock price has plummeted and has languished in the range of $1 to $5 a share since then. The stock closed 25 cents higher at $2.25 a share in light trading Friday.

Capital Pacific is the second bid for Peters Co. that the RTC has hoped to negotiate into a formal deal.

Just three months ago, giant Kaufman & Broad Home Corp. in Los Angeles announced that it had won exclusive negotiating rights for acquisition of the controlling interest.

But negotiations quickly stalled, reportedly over Kaufman & Broad's insistence on purchasing only the best performing of the Peters Co.'s assets, which include nine developments in Orange County, one in San Diego County and several in Los Angeles County.

A second Orange County firm, TMC Development in Santa Ana, also had submitted a bid for Peters Co. TMC President Dan Young declined to comment Friday.

Capital Pacific was founded in June, 1991, after Makarechian and Dowers failed in their attempt earlier in the year to acquire Costain Homes, the Newport Beach-based U.S. arm of Costain PLC in England.

Dowers, who had been president of Costain Homes, and Makarechian, then president of Shamron Corp., a major home and apartment builder in Washington and Virginia, had assembled a consortium of banks and private investment sources to finance the Costain acquisition.

When that bid was rejected they persuaded their backers to use the financing to start a new company.

In an interview in September, Makarechian said he also was raising cash by liquidating some of Shamron's assets.

The two men said in June that they believed their new home-building company, although starting in the midst of a recession, would be successful because of their access to cash at a time when many banks and thrifts are pulling out of real estate and slashing builders' credit lines.

But so far the company has only started one project--a 38-unit townhome complex in the Philips Ranch development in Pomona. Dowers said Friday that Capital Pacific also is negotiating the purchase of a residential parcel in Las Vegas.

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