PulteGroup Inc. (PHM) announced its decision to terminate its $250 million revolving credit facility on March 30, 2011 in order to cut down its operating costs. As a result, the company will have to bear a one-time charge of roughly $1.3 million in the first quarter financial results. However, Pulte plans to introduce a new credit facility within the next 12 to 18 months.

Over the last three years, Pulte had paid down more than $3.1 billion of senior notes and other bond obligations. With the termination of the credit facility program, Pulte would be able to do away with the fees incurred for the purpose. Previously, the company had credit facility of $750 million, which was however abridged to $250 million during the fourth quarter of 2010 with an objective to reduce its borrowing capacity. The decision was driven by its lower need for working capital.

According to Pulte’s management, the company had cash and cash equivalents of $1.47 billion as of December 31, 2010, which is supposed to be sufficient for carrying out near-term investments with an aim to prosper in the long run. Moreover, the company can pursue aggressive purchases of lots in order to meet the growing demand. Pulte’s preliminary net signups for the first two months of 2011 totaled 2,674 homes, up 11% from the same period in 2010.

Another probable move could be rapid share repurchases. During the fourth quarter of 2010, the company did not repurchase any share although it still has approximately $102 million of share repurchases remaining under the current authorization.

Pulte’s performance in 2010 was not up to the mark, although it showed improvements over 2009. Net loss narrowed to $1.1 billion or $2.90 per share from $1.2 billion or $3.94 per share in 2009. Consolidated revenues escalated 12% to $4.57 billion driven by substantial number of home closing and a slight increase in average selling price.

Based in Bloomfield Hills, Michigan, PulteGroup Inc. (PHM) is engaged in the homebuilding and financial services businesses primarily in the U.S. and Puerto Rico. The company’s direct subsidiaries include Pulte Diversified Companies Inc., Del Webb Corporation and Centex Corporation. With the PulteGroup-Centex merger in 2009, Pulte emerged as the largest homebuilder in the country leaving behind key competitors like DR Horton Inc. (DHI) and KB Home (KBH).

 
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