Kimball Hill gains time to fend off crisis

Kimball Hill Inc. has received a reprieve from lenders, and financiers have agreed to lend the home builder another $10 million until March.

Already in default on its $500 million credit line, the Rolling Meadows-based Kimball Hill was also given permission to seek out another $5 million for cash flow needs as it struggles to fend off bankruptcy, according to a filing with the Securities and Exchange Commission.

"This seems to be uncommon," said Tracy Cross, of Schaumburg-based retail consulting firm Tracy Cross & Associates. Cross said he does remember large institutional lenders sticking by their largest builders during housing recessions in the past.

Often such loans are secured loans, meaning in the event of a bankruptcy these lenders are the first to be paid back through the builder's assets. Also, developers can use their most successful developments as collateral, Cross said.

Cross said he does not know how the Kimball Hill loans are structured. Company officials could not be reached for comment Tuesday.

The builder has until March 14 to make longer-term arrangements with the group of lenders, led by Harris N.A., according to the filing made Friday.

The landmark builder of Rolling Meadows and numerous other communities in the Northwest suburbs said earlier this month it lost $220.5 million last year. It also acknowledged auditor Deloitte & Touche had "substantial doubts about whether we will be able to continue as a going concern."

The firm expanded to 12 national markets in recent years -- including housing boom hot spots in Florida and California -- just as one of the deepest housing recessions in recent history was developing. Warrenville-based Neumann Homes filed for bankruptcy in the fall.

Kimball Hill has several projects under way in the suburbs, including Sugar Grove, where its Settlers Ridge had planned to develop 2,470 homes on 1,300 acres. Just 150 to 200 permits have been applied for, according to Sugar Grove officials.

The company has been led since 1969 by area philanthropist and Harper College Trustee David K. Hill, who gave up his role as chief executive officer last year and still serves as chairman of its board. He is the son of founder Kimball Hill.