And of course the latest news from the company:
Home Solutions of America, Inc. Completes Repayment of Bank Debt Ahead of Previous Schedule
DALLAS--(BUSINESS WIRE)--Home Solutions of America, Inc. (Pink Sheets:HSOA), a commercial, institutional and infrastructure construction company serving the private and public sectors, announced today that on July 3, 2008, ahead of the schedule agreed to last month, it completed repayment of a previously agreed “Payoff Amount”, to Texas Capital Bank (TCB) and its syndicate members. The total amount repaid was $10.5 million and HSOA is now relieved of any further principal remittances to the bank syndicate, including any future receivables or cash collections.
Funds for the payoff came from accounts receivable collected through July 3, 2008, an equity investment by the Company’s Chairman and another large shareholder and the proceeds from the sale of the business of the Company’s PW Stephens subsidiary. The Company’s remaining obligations to its bank lenders are to issue warrants to acquire 2,100,000 shares of its common stock to the lenders and to replace or cash collateralize approximately $2.0 million of letters of credit issued pursuant to the bank facility, in each case on or before August 1, 2008.
In connection with these transactions, EvenFlow Funding, LLC, an entity controlled by HSOA’s Chairman, Michael J. McGrath, Jr., has invested an additional $1.5 million. Another investor, MT Trading, LLC and Sondra Beit, has also collectively invested $1.5 million. The investors acquired 13% convertible redeemable preferred stock, as well as warrants to acquire, in the aggregate, 6,000,000 shares of the Company’s stock. The Company has the right to redeem the preferred stock at 110% of par within 90 days, and if it does so 75% of the warrants are cancelled. After the 90 days, the preferred stock is redeemable at 125% of par. It is mandatorily redeemable at 125% on June 15, 2013.
Mr. McGrath has also agreed to fund an additional $2.0 million of equity to the Company to ensure that the bank letters of credit are replaced or cash collateralized. In addition, Mr. McGrath personally guaranteed a $500,000 loan made by the purchasers of PW Stephens in connection with that transaction, as described below. In consideration for Mr. McGrath’s $2.0 million commitment and guaranty of the $500,000 loan, the Company agreed, by September 1, 2008, to pay Mr. McGrath $250,000 or to issue Mr. McGrath (or, at his election, EvenFlow) a warrant for the purchase of 373,134 shares of the Company’s common stock. In addition, should Mr. McGrath pay any amounts to the Company under the commitment or guaranty, the Company agreed to issue Mr. McGrath (or, at his election, EvenFlow) one share of the Company’s Series C Preferred Stock per $10.00 paid and warrants to purchase 20 additional shares of common stock for every share of preferred stock that is issued.
The sale of the PW Stephens business is part of HSOA’s plan to focus on its core competencies. The asbestos, mold and lead paint remediation company was sold to an entity controlled by PW Stephens’ current management. The purchase price was $5.0 million, reduced by $700,000 with respect to cash distributed by PW Stephens by the Company prior to the sale. In connection with the sale transaction, $500,000 of the sale proceeds were lent by PW Stephens to another Company subsidiary which issued a $500,000 promissory note payable September 1, 2008, guaranteed by Mr. McGrath. The promissory note and the guarantee were among the assets conveyed to the buyers of the PW Stephens business.
HSOA’s Chairman, Michael J. McGrath, Jr. said: “Relieved of our bank debt, HSOA is now poised to look to the future. The company can now use its receivables to fund its ongoing operations and focus on its core competency, specifically construction opportunities related to the recovery of the Gulf Coast as well private development projects. As we do so, we will also continue our review of certain non-core and non-strategic assets and consider our options for divesting them, as we have done with PW Stephens.”
The Company further announced that it has made significant progress in completing the restatement of its quarterly reports on Form 10-Q for the first and second quarters of 2007, completing the quarterly report on Form 10-Q for the third quarter of 2007 and the annual report on Form 10-K for 2007. The Company expects these reports to be completed and filed in the near future. The Company also said that it is continuing to cooperate fully with an ongoing SEC investigation.
About Home Solutions of America, Inc.
Home Solutions of America, Inc. is a provider of restoration, construction and interior services to commercial and residential customers. Its Fireline subsidiary is involved in providing construction services, rebuilding, catastrophic storm response and contents restoration for commercial, industrial and residential properties. Based in Tampa, Fireline is certified in multiple aspects of the restoration industry, including smoke, fire, water and mold. The Company has operations in California, Texas, Florida, Alabama, Georgia, Louisiana, Mississippi and North Carolina. Home Solutions Restoration of Louisiana, Inc., which does business as Associated Contractors (“Associated”), is a Louisiana based commercial, industrial and residential contractor working in the governmental and private arenas. Associated has been one of the larger players in redeveloping public schools in the aftermath of Hurricane Katrina. Its clients include the State of Louisiana, the City of New Orleans, the Louisiana National Guard, the historic French Market and Louis Armstrong International Airport. For additional information, please visit the Company’s Web site at http://www.hsoacorp.com