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Last Portion of Presley Loan Is Purchased : Finance: Sale of B of A's share of a $340-million loan package is a major step in the firm's effort to restructure.

January 05, 1994|JAMES S. GRANELLI | TIMES STAFF WRITER

NEWPORT BEACH — Continuing its financial restructuring, Presley Cos. said Monday that Bank of America has sold the final portion of a $340-million loan package that provides the Orange county home builder with much of its operating cash.

The Newport Beach-based company said that Foothill Capital Corp. in Los Angeles and Pearl Street L.P. in New York have bought Bank of America's share, which totaled about $105 million.

The two finance companies were among four such firms that acquired the first chunk of the loans, about $235 million worth, last May from two banks and a thrift. At that time, Presley won a two-year extension on the due date, moving it from this May to May, 1995.

The change in lenders does not increase the amount of interest that Presley must pay, a company spokesman said. Nor does it rescue the builder from its financial woes.

Presley said it has hired the investment banking firm of Bear, Stearns & Co. to act as a financial adviser and has formed a special committee to review proposed restructurings or other changes in the company's stock and debt.

Neither the company nor its spokesman would comment on whether Presley directors are seeking a purchaser.

Wade Cable, Presley's president, said the sale of Bank of America's position is a major step in his company's effort to restructure its debt and equity. Unlike banks, finance companies are not under pressure from federal regulators to resolve large loans to troubled companies. A Presley spokesman pointed out, though, that the company is current on its loan payments.

Presley, one of California's oldest and once one of its largest home builders, has been hurt by California's real estate slump.

It lost $22.3 million for the first nine months of last year, nearly double a $11.4-million loss for the same period in 1992. Its revenue slumped 37% to $20 million for the period from $31.7 million for the previous year's first nine months.

The company, with 39 sales offices, has master-planned communities and other projects in California, Arizona and New Mexico.

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