Lyon Renews Offer for Dominant Presley Stake
Orange County home builder William Lyon, who proposed acquiring a dominant share of the Presley Cos. in December, presented a scaled-down version of his plan for the Newport Beach-based home builder on Thursday.
The new bid is the latest in Lyon’s effort to consolidate his home-building operations. William Lyon Homes Inc. has been negotiating with Presley since last summer, when Lyon offered to buy the company for $18 million, or 40 cents a share, in cash. But that was less than half of what Presley’s stock was trading for at the time, and was rejected by Presley’s board.
Under terms of the latest plan, Lyon--who already owns 23% of Presley--offered to buy another 37% of the company, at 62 cents a share. Previously, Lyon offered to buy from 40% to 49% of the shares he didn’t already own, at the same price.
As part of the offer, Lyon wants to negotiate the per-share purchase price with each individual shareholder if he exceeds the 37% limit. If the deal is approved, Presley still would acquire Lyon’s privately held Lyon Homes for $48 million.
If completed, the new offer would give Lyon at least 60% of Presley, leaving him with a firm grip on both companies.
Lyon’s offer will be reviewed by a special committee of Presley’s board of directors, but the company gave no timetable for evaluating the deal. Officials of the two companies were unavailable for comment.
The plan was announced late Thursday after the close of the stock markets. Presley’s shares were unchanged, at 63 cents, on the New York Stock Exchange. When Presley went public in October 1991, the firm’s stock was valued at $10 per share. It peaked in February 1992 at $17.25.
During the early 1990s, as the housing market slumped, Presley had a large inventory of unsold homes, particularly in the Inland Empire. To offset lower sales, the company restructured, swapping stock for debt and selling off assets. It has begun buying parcels that can be developed into subdivisions rather than entire communities, requiring smaller cash outlays.
Faced with $20 million in interest payments every six months, the company has struggled to repay its debts. Last year, Presley received a loan that raised its line of credit to $100 million from $72 million, and its deadline for paying off debts was extended to May 2001.
