Standard Pacific Looking To Raise Capital (SPF, XHB)

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Standard Pacific Corp. (NYSE: SPF) is doing something some might not expect out of a homebuilder.  It filed to raise up to $600 million by issuing securities and debt to fund the development or purchase of residential properties, acquire other homebuilders, or pay existing debts.

In an SEC Filing it disclosed that some 60% of its net deliveries for 2007 have come from the three troubles real estate markets of California, Florida, and Arizona.  As of September 30, 2007, Standard Pacific had roughly $26.9 million in cash and $416.4 million in long-term investments.  It also carried some $2.849 Billion in property, plant, and equipment.  Its total assets carried were listed as $4.0299 Billion.  It also listed $2.1 Billion in long-term debt and total liabilities were carried as $2.598 Billion.

Frankly, we see the potential dilutive nature of this would-be securities offering as a welcome sign despite what would have been a red flag during good times.  This will show if the company can raise funds for itself, maybe the worst in housing has been seen.

Yesterday we noted how the SPDR S&P Homebuilder (AMEX: XHB) ETF had recovered some 50% and showed that perhaps the worst has been seen in the sector.  Just a month or so ago, many of these homebuilders looked like some might go to zero.  Lehman Brothers also initiated coverage on the larger stocks in the group just this morning.

The California homebuilder is up 5% or $0.26 in mid-day trading to $5.24 and the 52 week range is $1.47 to $26.56.

Jon C. Ogg
February 27, 2008