Baldwin Co. Defaults on Property Loan
Baldwin Co., the Newport Beach home builder that raised more than $150 million in a July bond offering, is in default on the $16.1-million principal remaining on a land-acquisition loan for an Anaheim Hills housing development.
The company says it has enough cash to pay off the loan, but won’t do so while it is negotiating with the federal government for a substantial reduction of its debt.
Default notices filed in Orange County Superior Court in Santa Ana this week show that Baldwin originally borrowed $55.7 million in December, 1988, to acquire the land and borrowed an additional $20.7 million in July, 1989.
A spokesman for Baldwin confirmed the default, which involves the property commonly known as the Summit in Anaheim Hills, but said it was a routine matter that would likely be resolved through negotiation.
In its bond prospectus filed with the Securities and Exchange Commission, Baldwin says that the federal Resolution Trust Corp. assumed ownership of the loan in 1991 when regulators seized Home Federal Savings in San Diego. Baldwin was negotiating an extension of the repayment schedule when the loan matured July 1, 1992, with a $16.1-million balance still owing, according to the SEC filing.
The company has been in negotiations with the RTC since then and has suspended payment pending the outcome of the talks.
In the SEC filing, the company said the proceeds of its July bond offering provided it with enough money to repay the loan in full but that it has held off because “the company believes it will be able to repurchase the loans at a substantial discount.”
RTC officials could not be reached to comment on why the government agency would reduce Baldwin’s debt when the company acknowledges that it is able to pay in full. Baldwin’s chief financial officer, Ron Therrien, declined comment on the situation.
