Newhall Land officials are breathing a sigh of relief today now that an East Coast bankruptcy court has given its parent company permission to keep the lights on – at least until the end of the month.

“It’s certainly another step in the right direction as we go through re-organization,” Marlee Lauffer, spokeswoman for Newhall Land and Farming Company, told The Signal Wednesday.

On Sunday, the land development company that owns Newhall Land – LandSource Communities Development LLC – filed a voluntary petition for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware in Wilmington, listing 21 affiliated companies as its debtors.

Newhall Land, a wholly-owned subsidiary of LandSource, is one of those debtors.

Many of the 21 debtor companies are affiliated with Newhall Land and Farming, including the Tournament Players Club at Valencia and the Valencia Corporation.

On Tuesday, a bankruptcy court judge in Delaware gave LandSource permission to continue its day-to-day operations, as well as permission to access $35 million.

Early in the week, when asked if filing a Chapter 11 petition is similar to pausing a movie on TV, they said “yes.” The company is still in business but no forward movement – planning, speculating, projecting – is taking place while court proceedings are ongoing, they explained.

It doesn’t diminish the fact that Newhall Land holdings are significant.

Earlier this week, Lauffer told The Signal: “Our land assets enjoy the benefit of longterm value.”

On June 30, LandSource lawyers are expected to return to bankruptcy court to continue discussion on DIP (debtor in possession) financing.

In the meantime, the fate of 21 companies hangs in the balance fueling speculation and rumor.

The Signal tried to get to the bottom of one claim made by a reliable sourse close to TPC Wednesday that golf celebrity Tiger Woods had reportedly expressed an interest in buying TPC and has been pursuing the prospect as recently as in the last two weeks.

LandSource representatives said they’ve heard nothing about Woods as it pertains to LandSource.

“I know nothing about that,” Lauffer said when asked about the golf course. “TPC will continue to be the first rate golf course it has been.

“It will not experience any difference in the club’s operations or the amenities it offers,” she said.
Efforts to contact Woods’ management company, IMG, through messages left at IMG officies in Los Angeles and in Cleveland Wednesday were not successful.

Once a course featured on the PGA Tour circuit, the TPC has gone through a few changes in the past couple of years.

In the last year, TPC General Manager Ron Horton left to pursue other opportunities, Lauffer said.
His replacement, current General Manager Mike Van Der Goes, started with the club this past year.

Reached Tuesday, Van Der Goes referred all comments about ownership of the club to Marlee Lauffer and Steve Zimmer, as did TPC Director of Sales Anthony Falasca.

LandSource, which plans and develops master-planned communities and transforms land into read-to-build home sites and commercial properties in Arizona, California, Florida, New Jersey, Nevada and Texas, had attempted for several months to reach agreement with its lenders to restructure its debt. LandSource defaulted on load payments due April 22.

What happens to its debts, its assets – including land owned by Newhall Land and specifically land earmarked for development as the 21,000-unit Newhall Ranch – and its future will be decided by a court in Delaware.

LandSource spokeswoman Tamara Taylor said no employees of LandSource have been laid off as a result of the company’s debtor woes.

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Newhall Land is not going out of business, despite a petition by its parent company last weekend to file for bankruptcy protection.

“We’re a 125-year-old company and have been developing land for 40 years, and we will continue with our day-to-day operations,” Marlee Lauffer, spokeswoman for Newhall Land and Farming Company, told The Signal on Monday.

“Obviously, changes in the real estate market have created new problems, but we’ve weathered these fluctuations before and we will weather these new fluctuations and flourish,” she said.

On Sunday, LandSource Communities Development LLC, owner of Newhall Land, filed a voluntary petition for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware in Wilmington.

As a LandSource subsidiary, Valencia-based Newhall Land is included in the filing.

Today, east coast lawyers representing Newhall Land’s parent company, LandSource Communities Development LLC – a land development company based in Aliso Viejo in Orange County – are scheduled to appear in bankruptcy court in Wilmington, Del., bringing with them a list of about 20 businesses named as debtors, many of them linked to Santa Clarita.

Topping the list of debtors linked to LandSource is Newhall Land and Farming Company.

“We have a hearing to consider the motions put forward by LandSource,” LandSource company lawyer Paul Noble Heath told The Signal from Delaware on Monday.

The list of “affiliated debtors” contained in his briefcase includes names familiar to many in Santa Clarita, including: Lennar Stevenson Holdings, LLC; Tournament Players Club at Valencia, LLC; Valencia Corporation; Stevenson Ranch Venture LLC; and Valencia Realty Company.

Lauffer told The Signal Monday that the company is not going out of business and is pressing ahead with its projects, including the 21,000 homes scheduled to built for Newhall Ranch.

“We have the benefit of longterm value,” she said. “Our land assets enjoy the benefit of longterm value.”

“We know that our assets are our property,” Lauffer added. “We anticipate that because of our assets we will continue.”

When asked if LandSource, since it owns Newhall Land, would sell land owned by Newhall Land to pay its debts, Lauffer referred comments to LandSource.

LandSource, which plans and develops master-planned communities and transforms land into ready-to-build home sites and commercial properties in Arizona, California, Florida, New Jersey, Nevada and Texas, had attempted for several months to reach agreement with its lenders to restructure its debt. LandSource defaulted on loan payments due April 22.

Tamara Taylor, LandSource spokeswoman, was asked by The Signal: “Does this mean Newhall Land is going to go out of business?”

She replied: “Absolutely not.”

“LandSource believes Chapter 11 provides the most effective means for the partnership to preserve the value of its business, meet post-petition obligations and maintain constituents’ confidence while it works with creditors to achieve a long-term restructuring,” Taylor said Monday.

Holly Schroeder, CEO of the Building Industry Association’s Los Angeles and Ventura counties chapter, said the Chapter 11 filing was no surprise.

“We know that many of our members may need to restructure their debt,” Schroeder said Monday evening. “At the same time, we know that the housing market is a cyclical market, and we have a tremendous ongoing need for housing in Southern California. We know that this market will turn.”

Taylor told The Signal that the Chapter 11 court process would be the best way for the company to manage its debt.

LandSource has received commitments for debtor in possession (DIP) financing from a group of lenders led by Barclay’s Bank, including a $135 million revolving line of credit that will enable LandSource to meet post-petition obligations and fund operations during the Chapter 11 reorganization.

According to LandSource, the DIP financing assures that its vendors, contractors and consultants will be paid for goods and services provided after the June 8, 2008, filing date.

News that it filed for bankruptcy protection was well received by representatives of companies with financial stake in LandSource and came as little surprise to any of those contacted by The Signal.

MacFarland Partners, Warehouse Realtor Investors and CalPERS own 68 percent of LandSource collectively, while Lennar Corp. and LNR Property Corp, each own a 16 percent share of the company.

A spokesman for MacFarland Partners who asked that his name not be used said: “We regret that LandSource was forced to file for bankruptcy protection and hope that the parties will be able to reach an equitable solution.

“We agree with LandSource that, in the long term, this investment will be seen as a good one.”

LandSource has been struggling for a while to pay its debts.

“We invested $900 million in the Newhall Ranch deal,” said Clark McKinley, spokesman for CalPERS. “If you take that and compare that with our overall investments of more than $244 billion, then this is one half of one percent of our total market assets.

“Something like this comes with the territory.”

McKinley was asked if CalPERS, with all its money, would consider settling LandSource’s debts since CalPERS has already invested in the company.

“We’re not a charity,” said McKinley, adding LandSource chased good projects at a bad time.

“It was good long-term investment but it came at a bad time,” he said, referring to the recession-like turn in the housing market.

LandSource invested heavily in development projects across the SouthWest.

Just six months ago, it was named one of the top four taxpayers in Henderson, Nev., in a grouping with business partner Lennar Corp.

In that tax assessment, Lennar (naming LandSource as one of four development companies) was assessed with property holdings of $34 million and appraised for that property at $97 million.

LandSource also owns properties in Arizona, Florida, Texas and New Jersey.

Marshall Ames, vice president of Lennar Corporation, spoke to The Signal in March when rumors circulated that a Middle Eastern firm was preparing to buy his company.

On Monday, he explained the impact of LandSource’s Chapter 11 petition on Lennar.

“The owners of LandSource had been negotiating for months in an effort to amend debt covenants with its lenders,” he said. “Unfortunately, the parties were unable to agree on restructuring terms that were mutually acceptable.”

In an e-mail sent by Ames to The Signal, he explained: “Because LandSource is a completely stand-alone entity, yesterday’s court filing covers only this specific joint venture.

“Lennar and the other owners are not responsible for, nor a guarantor of, any of LandSource’s debt. Lennar, founded in 1954, remains a financially strong company with ample liquidity.”

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