Beazer Buys Time for Rebound

As it waits for housing to revive, the company rebuilds capital with stock and bond sales.

Beazer Homes USA Inc., the builder that’s piled up $1.8 billion of losses since the collapse of the U.S. housing market, is buying time until the U.S. economy recovers by replenishing its capital with stock and bond sales.

Beazer sold $300 million of secured debt, raised about $160 million selling stock and hybrid securities and said it would buy back $250 million of bonds last week. The Atlanta-based company’s $300 million of 9.125 percent notes due June 2018 have returned 19 percent in the past six weeks and now trade at more than 97 cents on the dollar, according to data compiled by Bloomberg.

Confidence Grows

Confidence among U.S. homebuilders increased in July by the most in almost a decade. The National Association of Home Builders/Wells Fargo confidence index climbed 6 points to 35 this month, the highest level since March 2007, a report from the Washington-based group showed today. The gauge exceeded the most-optimistic projection in a Bloomberg News survey of 46 economists.

‘Overriding Objective’

Merrill said on the May conference call that returning to profitability was his “overriding objective” and that he’s trying to earn more by selling more houses, increasing margins, holding down fixed costs and cutting interest expenses.

‘Few Friends’

“The company had very few friends on Wall Street,” Richman said. “It caught the market by surprise that somebody would be willing to give them money.”

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