Chairman Makes a Bid to Buy Struggling Presley

By DARYL STRICKLAND

July 3, 1998 12 AM PT

TIMES STAFF WRITER

The chairman of Presley Cos. has offered to buy out the struggling company, one of Southern California’s largest home builders, for about 40 cents a share, much lower than the stock’s current price.

William Lyon would pay about $18 million in cash for the Newport Beach-based company, according to regulatory documents.

Presley said Thursday that a special committee from its board has been set up to evaluate the offer, which was submitted Tuesday and expires July 31. The company declined to comment further. Lyon, who owns 15% of the company’s outstanding shares, could not be reached.

Presley’s stock closed at 63 cents a share Thursday, down 19 cents, on the New York Stock Exchange. The company went public at $10 a share in October 1991 as the California housing market was peaking.

While some analysts said Lyon’s offer seems low, others said it may be the best the company can get.

If Lyon also assumes some of Presley’s $240-million debt load as part of the deal, “this may be the best alternative--even if it doesn’t put Presley on the soundest footing right now,” said Steven Prococo of Lark Research Inc.

Presley builds homes throughout the Southland and in Northern California, Arizona, New Mexico and Nevada. When the housing market began to slump, the company was stuck with huge inventories of unsold homes in master-planned communities in the Inland Empire and Stockton, areas that have not rebounded as quickly as the Bay Area and Orange County.

As sales declined, the company restructured by swapping stock for debt and selling off assets that reduced debts by more than $90 million. Lyon, who once had majority control of the company, reduced his stake as well.

Lately, Presley has switched strategies, buying smaller parcels more suited to developing subdivisions rather than entire communities. Those are easier to sell and require smaller cash outlays.

If the deal goes through, Presley will be acquired by Lyon’s other builder, William Lyon Homes Inc., which has flourished in recent years.