Item 1.01.
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Entry into a Material Definitive Agreement.
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On October 10, 2017, Beazer Homes USA,
Inc. (the Company) issued and sold $400 million aggregate principal amount of its 5.875% Senior Notes due 2027 (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 25, 2017,
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, together with cash on hand, to fund the repayment of $225 million of the Companys 5.75% Senior Notes due 2019 (the 2019 Notes) and $175 million of its 7.25% Senior Notes due 2023 (the
2023 Notes), including fees and expenses related to tender offers for the 2019 Notes and the 2023 Notes.
Interest on the
Notes is payable semi-annually in cash in arrears on April 15 and October 15 of each year, commencing April 15, 2018. The Notes will mature on October 15, 2027.
The Notes were issued under an Indenture, dated October 10, 2017 (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 October 15, 2022, 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 October 15,
2020, 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 105.875% 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 October 15, 2025, the Company may redeem some or all of the Notes at 100% of the
principal amount of the notes to be redeemed, 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, 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 October 10, 2017 (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 5.875% Senior Notes due 2027 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 Notes, the Indenture 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.
The Initial Purchasers or their affiliates have performed commercial
banking, investment banking and advisory services for the Company from time to time for which they have received customary fees and reimbursement of expenses.