WASHINGTON -- Washington Homes Inc. could raise a maximum of about $20 million by selling common shares to the public.
The Landover-based company, taken private in a management-led buyout in 1988, filed with the Securities and Exchange Commission Tuesday to sell 1.6 million common shares. After the sale, the public would hold almost a 30 percent stake in the company, while company officers and directors would control more than 70 percent of outstanding common shares.
A group including PaineWebber; Dean Witter Reynolds and Ferris, Baker Watts will underwrite the sale, according to the SEC filing.
Washington Homes, which builds homes in the Baltimore-Washington area, would use about $10.5 million of the proceeds to reduce outstanding bank debt as part of its recapitalization. In addition, it would use about $3.5 million to retire its outstanding preferred shares and warrants held by WH Investment Company Inc., the filing said.
Remaining proceeds would be used for general corporate purposes, including the development and construction of residential communities.
Despite a 49 percent decline in housing starts in the Baltimore-Washington market from 1988 to 1991, the company has increased its market share. For the 12 months that ended July 31, the company sold 862 homes, generating revenue of $117.4 million, compared with the sale of 559 homes, generating $78.6 million, a year earlier.