AV Homes, Inc. (NASDAQ:AVHI) Files An 8-K Entry into a Material Definitive Agreement

AV Homes, Inc. (NASDAQ:AVHI) Files An 8-K Entry into a Material Definitive Agreement

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Item1.01

Entry into a Material Definitive Agreement.

Offering of Senior Notes

On May18, 2017, AV Homes, Inc. (the Company) closed its
previously announced private offering of $400million of its
6.625% Senior Notes due 2022 (the 2022 Notes). The 2022 Notes
were issued to a senior notes indenture dated as of May18, 2017
(the Indenture) by and among the Company, certain subsidiaries of
the Company (the Subsidiary Guarantors) and Wilmington Trust,
National Association (Wilmington Trust), as trustee.

The Company intends to use the proceeds from this offering (i)to
fund the repurchase or redemption of any and all of the
$200million in aggregate principal amount of its outstanding
8.500% Senior Notes due 2019, (ii) to pay amounts currently
outstanding under its 2014 Secured Credit Agreement (as defined
below), totaling approximately $30million and (iii)for general
corporate purposes, which may include the financing of
acquisitions.

This report does not constitute an offer to sell, or the
solicitation of an offer to buy, the 2022 Notes or related
guarantees. Any offers of the 2022 Notes and related guarantees
were made only by means of a private offering memorandum. The
2022 Notes and related guarantees have not been registered under
the Securities Act of 1933, as amended (the Securities Act), or
the securities laws of any other jurisdiction, and may not be
offered or sold in the United States or to, or for the account or
benefit of, U.S. persons absent registration or an applicable
exemption from registration requirements. The Notes and related
guarantees were sold to qualified institutional buyers as defined
in Rule 144A under the Securities Act and to non-U.S. persons
outside the United States under Regulation S under the Securities
Act.

The Indenture

The 2022 Notes are guaranteed on a senior unsecured basis by the
Subsidiary Guarantors, and rank equally in right of payment with
the Company and the Subsidiary Guarantors existing and future
senior unsecured indebtedness that is not expressly subordinated
to the 2022 Notes. The Company will pay interest on the 2022
Notes semi-annually on May15 and November15, commencing on
November15, 2017, at a rate of 6.625% per annum. The 2022 Notes
will mature on May15, 2022. The Company has the option to redeem
all or a portion of the 2022 Notes at any time on or after May15,
2019 at the redemption prices set forth in the Indenture, plus
accrued and unpaid interest, if any, to but excluding the date of
redemption. At any time prior to May15, 2019, the Company has the
option to redeem up to 35% of the original principal amount of
the 2022 Notes with the proceeds of certain equity offerings by
the Company at a redemption price of 106.625% of the principal
amount of the 2022 Notes, plus accrued and unpaid interest, if
any, to but excluding the date of redemption, provided that at
least 65% of the original aggregate principal amount of the 2022
Notes remains outstanding after such redemption. Prior to May15,
2019, the Company may redeem some or all of the 2022 Notes at a
redemption price equal to 50% of the principal amount of the 2022
Notes, plus accrued and unpaid interest, if any, to but excluding
the applicable redemption date plus the applicable make-whole premium.

The Indenture
contains covenants that limit the ability of the Company and
certain of its subsidiaries to (i)pay dividends, or make other
distributions or redeem or repurchase the Companys capital stock;
(ii)prepay, redeem or repurchase certain debt; (iii)incur
additional and guarantee indebtedness; (iv)issue certain
preferred stock or similar equity securities; (v)make loans and
investments; (vi)incur liens; (vii)sell assets; (viii)enter into
transactions with affiliates; (ix)enter into agreements
restricting their subsidiaries ability to pay dividends; and
(x)consolidate, merge or sell all or substantially all assets.
These covenants are subject to important exceptions and
qualifications.

The Indenture
provides that upon specific change of control events that result
in a corporation or other legal entity with specified unsecured
debt ratings expressly assuming the notes and related obligations
or irrevocably and unconditionally guaranteeing the notes and
related obligations (a covenant replacement event), certain
covenants will no longer apply to the 2022 Notes and will be
replaced with new covenants. If the Company experiences specific
kinds of changes in control that do not result in a covenant
replacement event, holders of the 2022 Notes will be entitled to
require the Company to purchase all or a portion of the 2022
Notes at 101% of their principal amount, plus accrued and unpaid
interest to but excluding the date of repurchase. Following a
covenant replacement event, upon the occurrence of specific kinds
of changes of control that result in a downgrade of the rating
assigned to the 2022 Notes, holders of the 2022 Notes will be
entitled to require the Company to purchase all or a portion of
the 2022 Notes at 101% of their principal amount, plus accrued
and unpaid interest to but excluding the date of
repurchase.

The Indenture is
filed as Exhibit 4.1 to this Current Report on Form 8-K and is
incorporated herein by reference. The description of the material
terms of the Indenture above is qualified in its entirety by
reference to Exhibit 4.1.

Registration
Rights Agreement

In connection with
the closing of the offering of the 2022 Notes, the Company, the
Subsidiary Guarantors and the initial purchasers of the 2022
Notes entered into a registration rights agreement dated May18,
2017 in respect of the 2022 Notes (the Registration Rights
Agreement). to the terms of the Registration Rights Agreement,
the Company agreed, among other things, to use its reasonable
best efforts to file a registration statement with the Securities
and Exchange Commission to exchange the 2022 Notes and related
guarantees with registered notes having substantially the same
terms and the 2022 Notes and evidencing the same indebtedness as
the 2022 Notes and registered guarantees having substantially the
same terms as the original Note guarantees. Under the terms of
the Registration Rights Agreement, the Company agreed to use its
reasonable best efforts to cause the exchange to be completed
within 360 days after the issuance of the Notes, or, if required,
to file a shelf registration statement to cover re-sales of the
2022 Notes and related guarantees under certain
circumstances.

The Registration
Rights Agreement is filed as Exhibit 4.2 to this Current Report
on Form 8-K and is hereby incorporated herein by reference. The
description of the material terms of the Registration Rights
Agreement is qualified in its entirety by reference to
Exhibit4.2.

Unsecured
Credit Agreement

On May18, 2017,
the Company entered into an unsecured revolving credit agreement
(the Unsecured Credit Agreement) with each of the financial
institutions party thereto, JPMorgan Chase Bank, N.A., as
administrative agent and Citibank, N.A., as syndication
agent.

The Unsecured
Credit Agreement has substantially similar terms and provisions
to the 2014 Secured Credit Agreement (as defined below), except
that the facility is no longer secured by substantially all of
the assets of the Company and certain of its subsidiaries.

The Unsecured
Credit Agreement includes a revolving credit facility in an
aggregate principal amount of up to $155.0million, with an
accordion feature that allows us, with the consent of the
lenders, to increase the aggregate amount to $250.0million. The
facility includes a letter of credit sub-facility in an amount
equal to 50% of total commitments then in effect. The maximum
amount available under the Unsecured Credit Agreement is limited
to the lesser of (x) $155million (subject to increase to the
accordion) and (y)an amount equal to the borrowing base minus the
Companys consolidated senior debt. The borrowing base includes
50% of unrestricted cash, to the extent it exceeds the interest
reserve, and escrowed deposits and funds payable to us following
the sale of real property, plus the following, subject to certain
limitations:

85% of the book value of our real property that is under
contract or under construction and is or is planned to be
residential housing units or model homes; plus
65% of the book value of our finished lots and lots under
development; plus
50% of the book value of our entitled lands that are not
finished lots or lots under development.

To be included in
the borrowing base, the real property must be owned by the
Company or one of our subsidiaries that guaranties the Companys
obligations under the Unsecured Credit Agreement and meet certain
criteria.

Interest will be
payable on revolving credit borrowings at variable rates
determined by the applicable LIBOR plus 3.25% or the prime rate
plus 2.25%, at our election. We pay quarterly fees of 0.50% per
annum on the unused portion of the lenders commitments under the
Unsecured Credit Agreement to the lenders, 0.125% per annum on
the aggregate undrawn amount of each letter of credit to the
issuer of such letter of credit, and 3.25% per annum on the
aggregate undrawn amount of all letters of credit to the
lenders.

The Unsecured
Credit Agreement expires on July28, 2020. Upon expiration, all
borrowings become due and payable. We may prepay loans borrowed
under the Unsecured Credit Agreement or reduce the commitments
thereunder at our option, without any prepayment fee or
penalty.

The Unsecured
Credit Agreement is guaranteed by certain of our subsidiaries,
which include the following: Avatar Properties Inc., AVH
Bethpage, LLC, AVH Carolinas, LLC, AVH North Florida, LLC, AVH
EM, LLC, AV Homes of Arizona, LLC, Bonterra Builders, LLC, JCH
Group LLC, Royal Oak Homes, LLC and Vitalia at Tradition, LLC. We
have the option to add or remove guarantors from time to time,
subject to certain limitations.

The Unsecured
Credit Agreement contains certain restrictions and covenants,
which, among other things, restrict our ability to acquire or
merge with another entity, make investments, loans or guarantees,
incur additional indebtedness, create liens or other
encumbrances, or pay cash dividends or make other
distributions.

The Unsecured
Credit Agreement also requires that we comply with the following
financial covenants as of the end of each fiscal quarter:

our leverage ratio may not exceed 60%;
if our interest coverage ratio is less than 1.50 to 1.00, we
must deposit to an interest reserve account an amount equal
to the interest we have incurred on all indebtedness during
the prior 12 months; and
our consolidated tangible net worth, excluding the tangible
net worth of our subsidiaries that do not guaranty the
Unsecured Credit Agreement unless such subsidiaries are a
subsidiary of a guarantor, must be at least $325,059,027 plus
50% of our cumulative consolidated net income since
December31, 2016 plus 50% of the net proceeds of any equity
offerings.

Certain of the
lenders and their affiliates have performed and may in the future
perform various commercial banking, investment banking and other
financial advisory services for us for which they have received
and will receive customary fees and expenses.

The foregoing
description of our Unsecured Credit Agreement is qualified in its
entirety by reference to the full text of the credit agreement
that is filed as Exhibit10.1 hereto and incorporated herein by
reference.

Item1.02 Termination of a Material Definitive
Agreement.

The Unsecured
Credit Agreement replaced in its entirety that certain Credit
Agreement, dated as of April7, 2014 (as amended from time to
time, the 2014 Secured Credit Agreement), by and among the
Company, each of the financial institutions party thereto, and
JPMorgan Chase Bank, N.A., as administrative agent.

Item2.03
Creation of a Direct Financial Obligation or an Obligation Under
an Off- Balance Sheet Arrangement of the
Registrant.

The information
set forth under Offering of Senior Notes, The Indenture, and
Registration Rights Agreement in Item 1.01 above is incorporated
by reference into this Item 2.03.

Item8.01 Other Events.

Offering of
Senior Notes

On May18, 2017,
the Company issued a press release announcing the closing of the
Companys private offering of the 2022 Notes. A copy of the press
release is attached as Exhibit 99.1 to this Current Report on
Form 8-K and is incorporated herein by reference.

Tender
Offer

On May18, 2017,
the Company issued a press release announcing the initial results
of its previously announced tender offer for any and all of its
8.500% Senior Notes due 2019. A copy of the press release is
attached as Exhibit99.2 to this Current Report on Form
8-K and is
incorporated herein by reference.

Item9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit No. Description
4.1 Senior Notes Indenture dated as of May18, 2017 among AV
Homes, Inc., the Subsidiary Guarantors named therein, and
Wilmington Trust, National Association, as trustee, relating
to the 6.625% Senior Notes due 2022.
4.2 Registration Rights Agreement dated as of May18, 2017 among
AV Homes, Inc., the guarantors named therein, and J.P. Morgan
Securities LLC, as representative of the several initial
purchasers named therein.
10.1 Credit Agreement dated as of May18, 2017 among AV Homes,
Inc., each of the financial institutions party thereto,
JPMorgan Chase Bank, N.A., as administrative agent and
Citibank, N.A., as syndication agent.
99.1 Press Release dated May18, 2017.
99.2 Press Release dated May18, 2017.


About AV Homes, Inc. (NASDAQ:AVHI)

AV Homes, Inc. is a homebuilder engaged in the business of homebuilding and community development in Florida, Arizona and the Carolinas. The Company is also engaged in other real estate activities, such as the operation of amenities and the sale of land for third-party development. The Company’s segments include Florida, Arizona and the Carolinas. It focuses on the development and construction of primary residential communities serving first-time and move-up buyers, including under its local Bonterra Builders and Royal Oak Homes brands, and active adult communities, which are age-restricted to the age 55 and over active adult demographic. It owns approximately 5,010 developed residential lots, over 3,140 partially developed residential lots, approximately 8,650 undeveloped residential lots, and over 14,450 acres of mixed-use, commercial and industrial land. Its active adult communities include Solivita, CantaMia, Vitalia at Tradition, Encore at Eastmark and Creekside at Bethpage.

AV Homes, Inc. (NASDAQ:AVHI) Recent Trading Information

AV Homes, Inc. (NASDAQ:AVHI) closed its last trading session down -0.30 at 16.30 with 58,735 shares trading hands.

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