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Lyon Seeking to Buy Land With New Funds

August 05, 1993|JOHN O'DELL | TIMES STAFF WRITER

William Lyon Co. has reportedly found new financing to create a "good" company to buy land even as the old, "bad" William Lyon Co. is trying to sell off money-losing properties.

Industry sources started buzzing about the bifurcation of the company a month ago, and land brokers say that Lyon Co. executives have spread word that the company is looking for property to buy across Southern California as well as in parts of Northern California and Arizona.

To further its goals--and giving a big hint about its new financial shape--the company recently hired two land acquisition specialists: Chuck Colton, a former Arvida Co. vice president involved in the now-dormant 3,500-acre Talega Valley project in San Clemente, and Marc Perlman, a former Lyon Co. project manager.

Lyon officials, who have been aloof ever since the company's financial woes first surfaced late last year, would not comment.

There are no two legally separate William Lyon companies, just two sets of financial backers whose funds must remain segregated so the new money is not used to help bail Lyon Co. out on any of its older, troubled projects.

Things got rocky for William Lyon Co., long one of California's largest home builders, as slow home sales in 1990 and 1991 forced price cuts that slashed profit margins and made it difficult for the company to meet payment deadlines on its land acquisition and construction loans.

As a result of lengthy negotiations with its banks, Lyon restructured a lot of that debt last year in deals that left the company as developer and titular owner of the properties but requires it to let the banks have first call on the proceeds of each home sale.

That's the bad company--and to cut its mounting debt, it has been actively trying to sell land for much of this year.

The good company reportedly found financing for new deals from a consortium of overseas investors--one industry consultant said it appears that the money is coming largely from European sources.

The same consultant suggested that the "new" Lyon might soon be purchasing some of the same land that the "old" company is offering for sale at discount prices.

Others, however, suggest that Lyon's newly hired land acquisition specialists have been told to shy away from anything that might smack of a conflict and to look for new properties that will expand the company's reach.

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