Kimball Hill Homes Files For Chapter 11 to Restructure Debt

Kimball Hill Homes has announced that as part of its ongoing strategy to reposition the Company in light of current challenges faced by the homebuilding industry, Kimball Hill, Inc. and certain of its subsidiaries have filed voluntary Chapter 11 petitions for reorganization in the United States Bankruptcy Court in the Northern District of Illinois. The Company’s financial service businesses are excluded from the filing.

While its asset base remains strong, the Company has been impacted by many of the factors which have adversely impacted the homebuilding industry over the last 18 months. These factors have included the downturn in the housing market, severe challenges in the credit and mortgage markets, diminished consumer confidence, increased foreclosures and higher cancellation rates.

“Today’s decision was difficult to make, but we believe it is in the best interests of all of our stakeholders,” said Ken Love, president and CEO. “Filing for Chapter 11 will allow us to restructure our debt and other obligations, bringing our capital structure in line with current market realities.”

Mr. Love noted that in response to the challenging housing market, Kimball Hill has already successfully implemented a number of initiatives aimed at improving operating performance, including reducing overhead costs and the recent decision to exit the Florida market by the end of 2008.

“Our issues are financial, not operational. The next step in our restructuring is to strengthen our capital structure and position our company to weather the current storm that has hit the housing and capital markets. We have had significant discussions with potential plan sponsors and our senior lenders already, and we hope to agree on a reorganization plan in the next 90 days,” said Mr. Love. “We will continue to sell, build and deliver homes without interruption.”

Kimball Hill Homes said as of the filing date, the Company had in excess of $60 million in cash, which will provide the Company with more than ample liquidity to fund daily operations including post-petition payments to contractors and trade partners and to meet customer and employee obligations through the duration of the restructuring.

“Although companies entering Chapter 11 often require an infusion of cash to finance ongoing operations, we are fortunate to be entering Chapter 11 with an extremely favorable liquidity position and the support of our senior lenders, allowing us to avoid the sometimes steep costs of incremental financing,” Mr. Love said.

“We are committed to maintaining our normal operations, including all construction and sales activities, during the restructuring process,” said Mr. Love. “Kimball Hill customer satisfaction levels are at the highest levels in our history. We will maintain our high standards of excellence and our commitment to strong customer service remains our number one priority.”

The Company said it has taken steps to ensure that all of its customer programs continue without interruption including its comprehensive warranties.

“We are extremely grateful to our customers, our associates, and our suppliers who continue to support the Company,” said Mr. Love. “Kimball Hill has been developing communities, building homes and supporting the American Dream of home ownership for 39 years. During our 39-year history we have successfully managed our way through a number of cyclical downturns. Our homes will continue to stand out for their quality construction and innovative design for many more decades to come.”

Source: Kimball Hill Homes

Net News Publisher