Realogy Reports Second-Quarter Loss of $15 Million
By Jim Zellmer
Oshrat Carmiel:
8 billion in 2007, said its second-quarter loss narrowed after the company cut expenses to offset a decline in revenue.
The net loss decreased to $15 million from $27 million a year earlier, Parsippany, New Jersey-based Realogy said today in a statement. Revenue dropped 27 percent to $1.02 billion.
The residential real estate slump is cutting revenue for brokers including Realogy, owner of Coldwell Banker and Century 21. Prices are being brought down in part by discounts on foreclosures. U.S. foreclosure filings hit a record in the first half, a sign that job losses and falling property prices deepened the housing recession, according to data provider RealtyTrac Inc. of Irvine, California.
Realogy's 10-Q can be found here. The 10-Q includes a discussion of Realogy's secured and unsecured debt and liquidity:
In connection with the closing of the Merger on April 10, 2007, the Company entered into a senior secured credit facility consisting of (i) a $3,170 million term loan facility, (ii) a $750 million revolving credit facility, and (iii) a $525 million synthetic letter of credit facility.
Interest rates with respect to term loans under the senior secured credit facility are based on, at the Company's option, (a) adjusted LIBOR plus 3.0% or (b) the higher of the Federal Funds Effective Rate plus 0.5% and JPMorgan Chase Bank, N.A.'s prime rate ("ABR") plus 2.0%. The term loan facility provides for quarterly amortization payments totaling 1% per annum of the principal amount with the balance due upon the final maturity date.
The Company's senior secured credit facility provides for a six-year, $750 million revolving credit facility, which includes a $200 million letter of credit sub-facility and a $50 million swingline loan sub-facility. The Company uses the revolving credit facility for, among other things, working capital and other general corporate purposes, including permitted acquisitions and investments. Interest rates with respect to revolving loans under the senior secured credit facility are based on, at the Company's option, adjusted LIBOR plus 2.25% or ABR plus 1.25% in each case subject to adjustment based on the attainment of certain leverage ratios. At June 30, 2009, the amount available for borrowings under our revolving credit facility was $4 million (after giving effect to $136 million of outstanding letters of credit).
The Company's senior secured credit facility provides for a six-and-a-half-year $525 million synthetic letter of credit facility for which the Company pays 300 basis points in interest on amounts utilized. The capacity of the synthetic letter of credit is reduced by 1% each year and as a result the amount available was reduced to $518 million on December 31, 2008 and to $515 million at June 30, 2009. On April 26, 2007, the synthetic letter of credit facility was used to post a $500 million letter of credit to secure the fair value of the Company's obligations with respect to Cendant's contingent and other liabilities that were assumed under the Separation and Distribution Agreement and the remaining capacity was utilized for general corporate purposes. The stated amount of the standby irrevocable letter of credit is subject to periodic adjustment to reflect the then current estimate of Cendant's contingent and other liabilities.
The Company's senior secured credit facility is secured to the extent legally permissible by substantially all of the assets of the Company's parent company, the Company and the subsidiary guarantors, including but not limited to (a) a first-priority pledge of substantially all capital stock held by the Company or any subsidiary guarantor (which pledge, with respect to obligations in respect of the borrowings secured by a pledge of the stock of any first-tier foreign subsidiary, is limited to 100% of the non-voting stock (if any) and 65% of the voting stock of such foreign subsidiary), and (b) perfected first-priority security interests in substantially all tangible and intangible assets of the Company and each subsidiary guarantor, subject to certain exceptions.
Unsecured debt:
Beginning with the interest period which ended October 2008, the Company elected to satisfy the interest payment obligation by issuing additional Senior Toggle Notes. This PIK Interest election is now the default election for future interest periods through October 15, 2011 unless the Company notifies otherwise prior to the commencement date of a future interest period.
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ased upon the Company's current financial forecast and additional equity available through December 31, 2009, as set forth in the 2008 Form 10-K, the Company believes that it will continue to be in compliance with, or be able to avoid an event of default under, the senior secured leverage ratio and meet its cash flow needs during the next twelve months. The Company has the right to avoid an event of default of the senior secured leverage ratio in three of any of the four consecutive quarters through the issuance of additional Holdings equity for cash, which would be infused as capital into the Company. The effect of such infusion would be to increase Adjusted EBITDA and reduce net senior secured indebtedness.
