The terms of the engagement letter that the Company entered into on
June 24, 2008 ("Engagement Letter") with FTI provided, among other
things, for Brad Foster of FTI to serve as the Company's interim
Chief Restructuring Officer. In his role as an officer of the
Company Mr. Foster will report directly to our Chief Executive
Officer. The Engagement Letter also provides for the services of
other temporary employees and advisors to support Mr. Foster in his
role.
In connection with the exploration of available debt restructuring
alternatives, the Company has elected to cease making certain
scheduled interest and/or principal curtailment payments while it
attempts to negotiate modifications or other satisfactory resolutions
from its lenders. The subject indebtedness represents a significant
number of the Company's projects. The failure to make such interest
and/or principal curtailment payments constitutes breaches of the
terms of the loan agreements, some of which have reached maturity. If
such breaches are not cured prior to the expiration of any applicable
grace periods and such matured loans are not extended, then, under
the terms of the loan agreements, the lenders may be entitled to
charge an increased, or default, rate of interest and/or declare the
principal amount to be immediately due and payable in full. The
Company anticipates that it may be forced to cease making certain
additional scheduled interest or principal curtailment payments in
the near future if meaningful concessions are not derived in the
on-going negotiations with its lenders.
The aggregate amount of the Company's and its affiliates' outstanding
indebtedness at June 30, 2008 was approximately $157 million, and it
is anticipated that scheduled interest or principal curtailment
payments will be ceased with respect to up to $94 million of this
indebtedness where sufficient interest reserves are not currently in
place.
About Comstock Homebuilding Companies, Inc.
Established in 1985, Comstock Homebuilding Companies, Inc. is a
publicly traded, diversified real estate development firm with a focus
on affordably priced for-sale residential products. Comstock builds
and markets single-family homes, townhouses, mid-rise condominiums,
high-rise condominiums, mixed-use urban communities and active adult
communities. The company currently markets its products under the
Comstock Homes brand in the Washington, D.C.; Raleigh, North
Carolina; and Atlanta, Georgia metropolitan areas. Comstock
Homebuilding Companies Inc. trades on Nasdaq under the symbol CHCI.
For more information on the Company or it projects please visit
www.comstockhomebuilding.com.
Cautionary Statement Regarding Forward-Looking Statements
This release contains "forward-looking" statements that are made
pursuant to the Safe Harbor provisions of the Private Securities
Litigation Reform Act of 1995. Statements that are predictive in
nature, that depend upon or refer to future events or conditions, or
that include words such as "may," "will," "expects," "projects,"
"anticipates," "estimates," "believes," "intends," "plans," "should,"
"seeks," and similar expressions, including statements related to
Comstock's expected future financial results and anticipated growth
in the Washington, D.C. housing market, are forward-looking
statements. Forward-looking statements involve known and unknown
risks and uncertainties that may cause actual future results to
differ materially from those projected or contemplated in the
forward-looking statements. These risks and uncertainties include,
but are not limited to, economic, market and competitive conditions
affecting Comstock and its operations and products, risks and
uncertainties relating to the market for real estate generally and in
the areas where Comstock has projects, the availability and price of
land suitable for development, materials prices, labor costs,
interest rates, Comstock's ability to service its significant debt
obligations, fluctuations in operating results, anticipated growth
strategies, continuing relationships with affiliates, environmental
factors, government regulations, the impact of adverse weather
conditions or natural disasters and acts of war or terrorism.
Additional information concerning these and other important risks and
uncertainties can be found under the heading "Risk Factors" in the
Company's most recent form 10-K, as filed with the Securities and
Exchange Commission on March 16, 2007. Comstock specifically
disclaims any obligation to update or revise any forward-looking
statements, whether as a result of new information, future
developments or otherwise.
SOURCE: Comstock Homebuilding Companies, Inc.