Capital Pacific Homes Signs Deal to Control J.M. Peters

Sale of controlling interest in J.M. Peters Co. moved a step closer to completion Friday with the signing of a definitive agreement under which another Orange County home builder would acquire 12 million shares of Peters Co.’s common stock and more than $144.8 million of its debt.

None of the parties involved in the deal were available for comment Friday, and details of the agreement were not disclosed.

In a letter of intent signed last month, Capital Pacific Homes--a year-old builder based in Newport Beach--agreed to pay the federal Resolution Trust Corp. $47.2 million in cash to acquire 85.8% of Peters Co. stock.

The RTC is negotiating the deal as receiver for San Jacinto Savings in Houston, which owned the Peters Co. stock and was seized by government regulators in 1990.

If the sale is completed, Capital Pacific would acquire majority ownership of a company that holds nearly 2,000 residential lots in Southern California.

Because Peters Co.’s debt to San Jacinto would be transferred to Capital Pacific in exchange for the cash, according to the letter of intent, the deal would effectively forgive $97.6 million in loans and enable Capital Pacific to acquire the Peters lots at a steep discount from their original cost.

Had the debt to San Jacinto been paid in full, it would have helped erase the cost to taxpayers of liquidating the failed thrift.

But industry sources say the deal isn’t all gravy for Capital Pacific.

Among other things, the company will assume liability for warranties on about 6,000 homes that have been built by Peters Co. in recent years. Capital Pacific would also take on a number of lots in Fullerton that are part of an old oil field and must be cleaned of potentially toxic petroleum waste before they can be used for homes.