DALLAS, June 10, 2008 (PRIME NEWSWIRE)—Home Solutions of America, Inc. (Pink Sheets:HSOA), a provider of restoration, construction and interior services to commercial and residential customers, announced today that it has entered into a forbearance agreement with its lenders that will enable the company to retire, through a series of payments, all of its current bank debt with Texas Capital Bank and its syndicate members by August 1, 2008.
The company also said that EvenFlow Funding, LLC, a newly created entity controlled by HSOA’s Chairman, Michael J. McGrath, Jr., has committed to provide up to $3.5 million of equity financing for working capital purposes under a separate funding agreement approved by the Board of Directors. The company has already received $2.0 million of these funds.
Mr. McGrath’s investment will be in the company’s newly created 13% Convertible Redeemable Preferred Stock. Mr. McGrath will also receive warrants to acquire additional shares of common stock at a nominal price at the rate of two warrants for every $1.00 invested in the preferred stock. The company may redeem the preferred stock at any time and must do so by the fifth anniversary of issuance.
The forbearance agreement calls for a series of payments cumulatively totaling $10.5 million—of which $1.729 million has already been paid. In addition, the company will issue to the lenders 700,000 warrants with an exercise price of $1.00, 700,000 warrants with an exercise price of $1.50 and 700,000 warrants with an exercise price of $2.25.
Mr. McGrath, who recently acquired a 5.7% ownership position in HSOA, became Chairman of the Board in March. Mr. McGrath, who is also founder, Chairman and CEO of U.S. Mortgage Corporation, said he sees a significant potential market for HSOA’s services and is committed to creating a culture of transparency in the company’s operations and finances, along with rebuilding shareholder confidence. He also noted that the company is working on bringing up to date its 10Q and 10K filings and expects to have them completed and filed in the near future.
The company also recently announced that its management team, led by President and CEO Frank J. Fradella, had been joined by James M. Grady, a Senior Director with Alvarez & Marsal (A&M), who is serving as Interim Chief Financial Officer.
About Home Solutions of America, Inc.
Home Solutions of America, Inc. is a provider of restoration, construction and interior services to commercial and residential customers. Its Fireline subsidiary is involved in providing construction services, rebuilding, catastrophic storm response and contents restoration for commercial, industrial and residential properties. Based in Tampa, Fireline is certified in multiple aspects of the restoration industry, including smoke, fire, water and mold. The Company has operations in California, Texas, Florida, Alabama, Georgia, Louisiana, Mississippi and North Carolina. Home Solutions Restoration of Louisiana, Inc., which does business as Associated Contractors (“Associated”), is a Louisiana based commercial, industrial and residential contractor working in the governmental and private arenas. Associated has been one of the larger players in redeveloping public schools in the aftermath of Hurricane Katrina. Its clients include the State of Louisiana, the City of New Orleans, the Louisiana National Guard, the historic French Market and Louis Armstrong International Airport. For additional information, please visit the Company’s Web site at http://www.hsoacorp.com.
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Cautionary Notice:
This press release contains forward-looking statements made in reliance upon the safe harbor provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The statements contained herein which are not historical facts are considered forward-looking statements under federal securities laws. Such forward-looking statements are based on the beliefs of the Company’s management as well as assumptions made by and information currently available to them. The Company has no obligation to update such forward-looking statements. Actual results may vary significantly from these forward-looking statements based on a variety of factors. These risks and uncertainties include, but are not limited to, the Company’s future financial performance, business prospects, ability to win new contracts, the performance under existing contracts, the timing of completion of projects, ability to secure bonding, ability to secure labor in markets where it does not have a labor force, performance of subcontractors and the ability to collect accounts receivable. In addition, there can be no assurance that the actions taken or to be taken by the Company as described herein will result in increased revenues. Other important factors are described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006 in the section entitled “Risk Factors.”
