Technical Olympic shares plunge on bankruptcy fear

Discussion in 'Wall St. News' started by S2007S, Nov 7, 2006.

  1. S2007S


    By Ben Klayman

    CHICAGO, Nov 7 (Reuters) - Shares of Technical Olympic USA Inc. (TOA.N: Quote, Profile, Research) plunged to an almost five-year low on Tuesday on fear the home builder might be forced to bail out a floundering Florida joint venture and possibly face bankruptcy.

    Officials at Technical Olympic, also known as TOUSA, could not be reached for comment.

    But in a letter on Monday to Deutsche Bank, which heads the lending group for the Transeastern joint venture, the company said the venture's problems are due to heavy debt and a weak Florida housing market. It said the deteriorating market would prevent it from hitting its anticipated annual deliveries.

    The Hollywood, Florida-based company, in the letter, disputed Deutsche Bank's assertion "that TOUSA has an obligation to 'undertake funding initiatives to stabilize the borrower.'"

    TOUSA shares fell as low as $6.55 -- its lowest intraday price since December 2001 -- and were still off $3.79, or 35.1 percent, at $7.00 in afternoon trading on the New York Stock Exchange. It is the biggest one-day percentage decline in the stock's history.

    TOUSA said it is in talks with the lenders about the situation, but added it does not believe any obligations related to financing the venture have been triggered.

    "We fully intend to honor whatever obligations we may have under the loan guarantees," TOUSA Chief Executive Antonio Mon said in a statement.

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