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S&P: KB Home unaffected
Standard & Poor's said the corporate credit and debt ratings and negative outlook on KB Home (BB+) are not currently affected by the company's recently reported noncash charges and fourth-quarter net loss.
S&P said the company's sizable $772.6 million loss in its fourth quarter ended Nov. 30 reflects housing market conditions that continue to hurt demand and profitability.
As a result of the cumulative effect of these charges, S&P said KB Home obtained a temporary waiver of its minimum tangible net worth covenant from its bank lenders and is in the process of negotiating an amendment, which the company expects to complete by the end of the first quarter.
While market conditions remain extremely challenging, KB Home increased its cash position by $679 million in the fourth quarter and ended the year with a strong $1.3 billion in cash and equivalents, the agency said. Furthermore, KB Home had substantial availability under its $1.5 billion revolver.
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