Standard Pacific Corp., the Irvine-based home builder that has lost $1.4 billion in market value since 2005, had its biggest gain in at least 28 years after announcing Tuesday that a private equity firm would invest more than $530 million in the company.
The builder's shares rose $1.07, or 48%, to $3.29. The shares earlier touched $3.78.
Standard Pacific said in a statement that MatlinPatterson Global Advisers, led by Chief Executive David Matlin, would make the investment.
The agreement will reduce the builder's debt by about half and give the New York-based private equity firm three seats on an expanded 11-member board of directors, said Jeffrey Peterson, Standard Pacific's president. The accord is contingent on completing loan modifications with creditors that should occur before the end of the third quarter, he said.
"This is going to strengthen our balance sheet, enhance financial flexibility and provide funding for future growth opportunities," Peterson said. Standard Pacific won't be taken private, and the agreement limits MatlinPatterson to 49% of voting rights, he said.
Standard Pacific won a three-month debt waiver May 13, after Moody's Investors Service lowered its ratings over "lingering uncertainty" about its ability to repay loans.
Lenders granted the extension to Aug. 14 provided that Standard Pacific reduced its revolving credit facility commitment to $500 million from $700 million and agreed not to borrow under the facility when cash on hand exceeded $300 million, the company said at the time.
Standard Pacific is the worst performer in a Standard & Poor's measure of 15 home builders over the last year through Friday.
The company has lagged behind rivals mainly because it gets most of its revenue from California, where foreclosures are rising. Home prices in the state tumbled 32% in April from a year earlier as "distressed" properties and a lack of financing cut demand, the California Assn. of Realtors said Friday.
The U.S. housing market "will continue to be challenging to the end of this year at least," Peterson said.