What: Turnaround firm MatlinPatterson Global Advisors agreed to invest more than $530 million into troubled West Coast homebuilder Standard Pacific Corp. (NYSE: SPF).
The deal includes around $381 million of preferred stock convertible into common stock at $3.05 per share. MatlinPatterson also will exchange approximately $128.5 million of senior and subordinated notes for preferred stock warrants that have a $4.10 per share call price.
Why: Three reasons. First, the total investment amount was three times Standard Pacific’s market cap at the time of the deal announcement. Yeah, that’s noteworthy silly. Things soon evened out a bit as Standard Pacific’s stock rose nearly 70% on its first day of post-announcement trading.
Second, U.S. homebuilding is just a perfect place for a turnaround firm like MatlinPatterson to play. Demand is low, materials costs are high. The sector might not yet be at its cyclical nadir yet, but it’s clearly on that end of the curve.
Finally, it was a short week, which meant slim pickings.