Three of the largest homebuilders in the U.S., including Beazer Homes USA Inc. (BZH), KB Home (KBH) and Toll Brothers Inc. (TOL), have decided to pay lenders up to $340 million to meet their claims and settle legal actions related to a failed housing development deal near Las Vegas.
Individually, Los Angeles-based KB Home will be required to pay approximately $216 million–$225 million to the lenders and is expected to incur net obligation charges between $216 million and $240 million.
Beazer will reportedly pay an amount somewhere between $15.7 million and $17 million, while Toll Brothers is said to have reached a cash settlement for an undisclosed amount with lenders. Reportedly, another homebuilder, Arizona-based Meritage Homes Corporation (MTH) also owes $13.2 million to its lenders under the same bankruptcy settlement.
The 1,950-acre (789-hectare) South Edge community, also known as Inspirada, in Henderson, south of Las Vegas, was planned in 2004 as an off-balance-sheet joint venture among a few homebuilders. The objective was to develop a master community at the site with as many as 14,500 homes.
The investment opportunity was attractive and thus a group of lenders including JPMorgan Chase & Co.(JPM), Wells Fargo & Company (WFC), Credit Agricole SA and 36 others together lent a sum of $585 million for the project. But with the collapse of the housing market in 2008, the project was shelved.
Last year, J.P. Morgan group filed a petition in the U.S. Bankruptcy Court in Las Vegas to force the builder group into involuntary bankruptcy. The recent settlement on the matter was long expected and thus the resolution of the matter will bring short-term relief to the involved companies.
