Tarragon receives notice of default, acceleration from National City

By Jennifer Lanning Drey

Portland, Ore., Oct. 2 - Tarragon Corp. received a notice of default and acceleration from National City Bank related to three loans totaling $42.9 million that were made to wholly owned subsidiaries and guaranteed by the company, according to a Thursday filing with the Securities and Exchange Commission.

The loans are secured by real estate and are cross-collateralized.

Tarragon said the default notice states that one of the loans for $5.6 million was not paid at maturity in July, which constitutes an event of default. As a result, National City said it was accelerating all of the outstanding debt under the three notes, including accrued and unpaid interest of about $300,000.

Tarragon said it is in discussions with National City but could provide no assurances of the outcome of the discussions.

Defaults under the loans may constitute a cross-default or event of default under some of the company's other loan agreements, indentures and mortgages, Tarragon said.

JV agreement terminated

Tarragon also reported in the filing that it has terminated its agreement to form two joint ventures with Northland Investment Corp. because it failed to obtain a required lender consent.

Tarragon and Northland are engaged in litigation regarding the termination of the agreement.

Under the agreement, Tarragon and Northland had agreed to contribute assets to a real estate joint venture, subject to lender approval and customary closing conditions. The companies had also agreed to form a second joint venture to provide property, asset and construction management services to the properties in the first joint venture and to third parties.

Nasdaq non-compliance

Tarragon also said it received a deficiency notice of non-compliance from the Nasdaq because the minimum bid price of its common stock has closed below $1 per share for 30 consecutive business days.

The company has until March 25, 2009 to regain compliance under Nasdaq rules. In order to regain compliance, the bid price of the company's stock must close above $1 per share for a minimum of 10 consecutive days.

If Tarragon does not regain compliance by March 25, 2009, it will be delisted unless the company requests a hearing before the Nasdaq Listing Qualifications Panel.

Alternatively, Nasdaq may permit the company to transfer its common stock to the Nasdaq Capital Market if it satisfies minimum requirements.

Tarragon is a New York homebuilder.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.