William Lyon Homes Launches Solicitation of Votes for Prepackaged Restructuring Plan

• Plan Supported by Major Stakeholders
• Homebuilding Operations Not Impacted, Will Continue as Normal
• Secures Options on Two New Home Communities in Southern California

NEWPORT BEACH, Calif.--(BUSINESS WIRE)--William Lyon Homes, which develops new home communities in California, Arizona and Nevada, today announced that it has commenced the solicitation of votes for a prepackaged plan of reorganization to facilitate its recapitalization and ensure it remains a leading homebuilder for years to come.

“With the help of the Company’s improved balance sheet we look forward to continuing to grow our presence and market share in our key geographic regions.”

As previously announced on Nov. 4, the Company’s key stakeholders, including approximately 64% of the aggregate principal balance of the Company’s senior notes, its senior secured lender and the Lyon Family, have signed definitive agreements supporting the Company’s recapitalization plan. The solicitation is designed to describe the transaction and to seek the approval of creditors entitled to vote on the plan, including the holders of approximately 36% in aggregate principal balance of the senior notes that are not yet familiar with the reorganization plan. The Company’s plan contemplates no impairment of any business relationships and full payment of all obligations to the company’s business partners, vendors and employees.

“As the next step in completing our recapitalization, William Lyon Homes is pleased to commence the solicitation of votes for our recapitalization plan,” said Chief Executive Officer General William Lyon. “We are confident these efforts, supported by an overwhelming majority of our noteholders and senior secured lender, will strengthen the Company and position William Lyon Homes as an industry leader now and in the future.”

Votes on the Plan must be received by Kurtzman Carson Consultants LLC, by 5 p.m. EST on Friday, Dec. 16, 2011. The solicitation may be amended, extended or terminated. Once the ballots are received from its noteholders, the Company intends to commence a prepackaged Chapter 11 case in order to ensure a swift and complete implementation of the Plan. The entire process is expected to conclude by the end of the first quarter 2012.

“During this process and beyond, the Company will continue to build, sell and complete homes as it has for the last 55 years,” said William H. Lyon, Chief Operating Officer. “This recapitalization plan provides that our employees will be unaffected, our vendors will be paid in full, our business relationships will be honored and that we will continue to support and honor our warranties. It provides a platform for William Lyon Homes to continue its long legacy of quality and service.”

Additionally on Nov. 16, the Company secured an option agreement on two new projects in South Orange County. The two projects together will represent 194 single-family attached units in a highly desirable Orange County setting. The units are expected to range from 950 to 1,500 sq ft. The Company expects to open the projects in early 2013.

“These two sites represent a fantastic opportunity for the Company to provide new product in a very competitive, land constrained market,” said Matthew R. Zaist, Executive Vice President. “With the help of the Company’s improved balance sheet we look forward to continuing to grow our presence and market share in our key geographic regions.”

For more information about the recapitalization please visit the Company tab at www.lyonhomes.com.

This press release is for informational purposes only and is not a solicitation of votes or an offer to sell or a solicitation of an offer to buy any securities. For a complete statement of the terms and conditions of the solicitation, holders of the senior notes should refer to the disclosure documents, dated Nov. 17, 2011, which are being sent to all holders of record. Holders of the senior notes are urged to read the disclosure documents carefully because they contain important information. No offer to purchase or sell any securities will be made except in reliance on an exemption from the registration requirement of the securities act.

The Information Agent in connection with the solicitation for voting is Kurtzman Carson Consultants LLC, 599 Lexington Avenue, 39^th Floor, New York, NY 10022, Telephone: [phone], International Callers: [phone], email: [e-mail]. Requests for information, assistance in voting, or responding to the solicitation, or for additional copies of the consent solicitation statement should be directed to the Information Agent.

About William Lyon Homes

William Lyon Homes is primarily engaged in the design, construction and sale of new single-family detached and attached homes in California, Arizona and Nevada. Its corporate headquarters is located in Newport Beach, California. For more information about William Lyon Homes and its new home developments, please visit its website at www.lyonhomes.com.

Certain statements contained in this release that are not historical information contain forward-looking statements. The forward-looking statements involve risks and uncertainties and actual results may differ materially from those projected or implied. Further, certain forward-looking statements are based on assumptions regarding future events which may not prove to be accurate. Factors that may impact such forward-looking statements include, among others, changes in general economic conditions and in the markets in which the Company competes, the outbreak, continuation or escalation of war or other hostilities, including terrorism, involving the United States, changes in mortgage and other interest rates, changes in prices of homebuilding materials, weather, the occurrence of events such as landslides, soil subsidence and earthquakes that are uninsurable, not economically insurable or not subject to effective indemnification agreements, the availability of labor and homebuilding materials, changes in governmental laws and regulations, the timing of receipt of regulatory approvals and the opening of projects, and the availability and cost of land for future development, as well as the other factors discussed in the Company’s reports filed with the Securities and Exchange Commission.

The new securities expected to be issued pursuant to the plan have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws. Therefore, any such new securities may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and any applicable state securities laws.

This release does not constitute a solicitation of consents or votes to accept any plan, an offer to purchase any securities or a solicitation of an offer to sell any securities. Any solicitation or offer will be made pursuant to a disclosure statement and applicable law.