Item 1.01.
|
Entry into a Material Definitive Agreement.
|
On September 21, 2016, Beazer Homes
USA, Inc. (the Company) issued and sold $400 million aggregate principal amount of its 8.750% Senior Notes due 2022 (the Notes) through a private placement to qualified institutional buyers pursuant to Rule 144A under the
Securities Act of 1933, as amended (the Securities Act), and outside the United States pursuant to Regulation S under the Securities Act. The Notes were initially sold pursuant to a purchase agreement, dated September 8, 2016, among
the Company, the wholly-owned subsidiaries named as guarantors therein (the Guarantors) and Credit Suisse Securities (USA) LLC, as representative of the initial purchasers named therein (the Initial Purchasers). The proceeds
from the offering were used to fund the repayment of all of the Companys 6.625% Senior Secured Notes due 2018 (the 2018 Notes) and a portion of its 9.125% Senior Notes due 2019 (the 2019 Notes), including fees and
expenses related to a tender offer for the 2018 Notes.
Interest on the Notes is payable semi-annually in cash in arrears on March 15
and September 15 of each year, commencing March 15, 2017. The Notes will mature on March 15, 2022.
The Notes were issued
under an Indenture, dated September 21, 2016 (the Indenture), among the Company, the Guarantors and U.S. Bank National Association, as trustee. The Indenture contains covenants which, subject to certain exceptions, limit the ability
of the Company and its restricted subsidiaries (as defined in the Indenture) to, among other things, incur additional indebtedness or issue certain preferred shares, create liens on assets to secure indebtedness, pay dividends or make other equity
distributions, purchase or redeem capital stock, make certain investments and consolidate or merge. The Indenture contains customary events of default. Upon the occurrence of an event of default, payments on the Notes may be accelerated and become
immediately due and payable.
Upon a change of control (as defined in the Indenture), the Indenture requires the Company to make an offer
to repurchase the Notes at 101% of their principal amount, plus accrued and unpaid interest.
The Company may redeem the Notes at any time
prior to March 15, 2019, in whole or in part, at a redemption price equal to 100% of the principal amount, plus a customary make-whole premium, plus accrued and unpaid interest to, but excluding, the redemption date. In addition, at any time on
or prior to March 15, 2019, the Company may redeem up to 35% of the aggregate principal amount of Notes with the proceeds of certain equity offerings at a redemption price equal to 108.750% of the principal amount of the Notes plus accrued and
unpaid interest, if any, to, but excluding, the date fixed for redemption; provided, that at least 65% of the aggregate principal amount of the Notes originally issued under the Indenture remain outstanding after such redemption. Furthermore, at any
time prior to the maturity of the Notes, if at least 90% of the principal amount of the Notes have previously been repurchased and cancelled in connection with a change of control offer (as defined in the Indenture) the Company may redeem all of the
remaining Notes at a redemption price equal to 101% of the principal amount of the Notes redeemed, plus accrued and unpaid interest, if any, to the redemption date. On or after March 15, 2019, the Company may redeem some or all of the Notes at
the redemption prices set forth in the Indenture, plus accrued and unpaid interest to, but excluding, the redemption date.
The Notes rank
equally in right of payment with all of the Companys existing and future senior unsecured obligations, senior to all of the Companys existing and future subordinated indebtedness and effectively subordinated to the Companys
existing and future secured indebtedness, including indebtedness under the Companys revolving credit facility and its secured term loan, to the extent of the value of the assets securing such indebtedness. The Notes and related guarantees are
structurally subordinated to all indebtedness and other liabilities of all of the Companys subsidiaries that do not guarantee the Notes. The Notes are fully and unconditionally guaranteed jointly and severally on a senior basis by the
Guarantors.
In connection with the issuance of the Notes, the Company and the Guarantors entered into a Registration Rights Agreement,
dated as of September 21, 2016 (the Registration Rights Agreement),
with the representative of the Initial Purchasers. The Registration Rights Agreement requires the Company to register under the Securities Act the issuance, in exchange for the privately-placed
Notes, of 8.750% Senior Notes due 2022 (the Exchange Notes) having substantially identical terms to the Notes and to complete the exchange or, if the exchange cannot be effected, to file and keep effective a shelf registration statement
for resale of the privately-placed Notes. Failure of the Company to comply with the registration and exchange requirements in the Registration Rights Agreement within the specified time period would require the Company to pay as liquidated damages
additional interest on the privately-placed Notes until the failure to comply is cured.
The foregoing descriptions of the Indenture, the
Notes and the Registration Rights Agreement are qualified in their entirety to the forms of the Indenture and the Notes and the Registration Rights Agreement filed herewith as Exhibits 4.1, 4.2 and 4.3, respectively, and incorporated in this
Item 1.01 by reference.