LGI HOMES, INC. (NASDAQ:LGIH) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01 >Entry into a Material Definitive Agreement.
On May 25, 2017, LGI Homes, Inc. (the Company) entered into that
certain Second Amended and Restated Credit Agreement dated as of
May 25, 2017 (the Credit Agreement) by and among the Company,
each of the financial institutions initially a signatory thereto
(the Lenders), and Wells Fargo Bank, National Association, as
administrative agent (the Administrative Agent), Wells Fargo
Securities, LLC, as sole lead arranger and sole bookrunner, and
Fifth Third Bank as documentation agent. Capitalized terms not
defined in this Current Report on Form 8-K (this Current Report)
shall have the meanings given to such terms in the Credit
Agreement.
certain Second Amended and Restated Credit Agreement dated as of
May 25, 2017 (the Credit Agreement) by and among the Company,
each of the financial institutions initially a signatory thereto
(the Lenders), and Wells Fargo Bank, National Association, as
administrative agent (the Administrative Agent), Wells Fargo
Securities, LLC, as sole lead arranger and sole bookrunner, and
Fifth Third Bank as documentation agent. Capitalized terms not
defined in this Current Report on Form 8-K (this Current Report)
shall have the meanings given to such terms in the Credit
Agreement.
The Credit Agreement has substantially similar terms and
provisions to the 2016 Credit Agreement (as defined below) and
provides for a $600.0 million revolving credit facility, which
can be increased by request of the Company up to $650.0 million,
subject to the terms and conditions of the Credit Agreement. The
revolving credit facility matures on May 31, 2020. Prior to each
annual anniversary of the Credit Agreement, the Company may
request a one year extension of the maturity date. The initial
interest rate under the Credit Agreement is LIBOR (one month)
plus 3.15%.
provisions to the 2016 Credit Agreement (as defined below) and
provides for a $600.0 million revolving credit facility, which
can be increased by request of the Company up to $650.0 million,
subject to the terms and conditions of the Credit Agreement. The
revolving credit facility matures on May 31, 2020. Prior to each
annual anniversary of the Credit Agreement, the Company may
request a one year extension of the maturity date. The initial
interest rate under the Credit Agreement is LIBOR (one month)
plus 3.15%.
The Companys obligations under the Credit Agreement and all other
Guaranteed Obligations are guaranteed by each of the Companys
subsidiaries having gross assets equal to or greater than
$500,000. Prior to the occurrence of a Trigger Event under the
Credit Agreement, the Credit Agreement will be unsecured. A
Trigger Event occurs if at the end of any fiscal quarter, (i) the
ratio of EBITDA to Interest Expense of the Company and its
subsidiaries for the prior four fiscal quarters is less than 4.00
to 1.00 and/or (ii) the Leverage Ratio (defined as the ratio of
Total Consolidated Debt to Total Capitalization) is greater than
or equal to 57.5%. Upon the occurrence of a Trigger Event, the
Company will be required to grant the Administrative Agent a
first priority lien in substantially all real property, including
completed homes and homes under construction, of the Company and
its subsidiaries.
Guaranteed Obligations are guaranteed by each of the Companys
subsidiaries having gross assets equal to or greater than
$500,000. Prior to the occurrence of a Trigger Event under the
Credit Agreement, the Credit Agreement will be unsecured. A
Trigger Event occurs if at the end of any fiscal quarter, (i) the
ratio of EBITDA to Interest Expense of the Company and its
subsidiaries for the prior four fiscal quarters is less than 4.00
to 1.00 and/or (ii) the Leverage Ratio (defined as the ratio of
Total Consolidated Debt to Total Capitalization) is greater than
or equal to 57.5%. Upon the occurrence of a Trigger Event, the
Company will be required to grant the Administrative Agent a
first priority lien in substantially all real property, including
completed homes and homes under construction, of the Company and
its subsidiaries.
The Credit Agreement requires the Company to maintain (i)
Tangible Net Worth of not less than the sum of $300.0 million
plus 75% of the Net Proceeds of all Equity Issuances after
December 31, 2016 plus 50% of positive Consolidated Earnings
after taxes earned in any fiscal quarter after December 31, 2016,
(ii) a Leverage Ratio of not greater than 60.0% (as determined as
of the last day of each fiscal quarter), (iii) Liquidity of at
least $50.0 million, and (iv) a ratio of EBITDA to Interest
Expense for the most recent four quarters of at least 2.50 to
1.00.
Tangible Net Worth of not less than the sum of $300.0 million
plus 75% of the Net Proceeds of all Equity Issuances after
December 31, 2016 plus 50% of positive Consolidated Earnings
after taxes earned in any fiscal quarter after December 31, 2016,
(ii) a Leverage Ratio of not greater than 60.0% (as determined as
of the last day of each fiscal quarter), (iii) Liquidity of at
least $50.0 million, and (iv) a ratio of EBITDA to Interest
Expense for the most recent four quarters of at least 2.50 to
1.00.
The Credit Agreement also prohibits (i) the Company and its
subsidiaries from making any Investments, other than as permitted
under the Credit Agreement (including a limitation on investments
in rental housing), (ii) the Company from having its Land Value
exceed, at any time, 145% of Tangible Net Worth and (iii) the
number of Speculative Housing Units and Model Housing Units, at
the end of any fiscal quarter, from exceeding the number of
Housing Units sold during the period of six months ending on the
last day of such fiscal quarter, on an annualized basis,
multiplied by 45%.
subsidiaries from making any Investments, other than as permitted
under the Credit Agreement (including a limitation on investments
in rental housing), (ii) the Company from having its Land Value
exceed, at any time, 145% of Tangible Net Worth and (iii) the
number of Speculative Housing Units and Model Housing Units, at
the end of any fiscal quarter, from exceeding the number of
Housing Units sold during the period of six months ending on the
last day of such fiscal quarter, on an annualized basis,
multiplied by 45%.
In addition, the Credit Agreement contains various covenants
that, among other restrictions, limit the Companys ability to (i)
create, issue, incur or assume indebtedness, (ii) conduct
intercompany transfers, (iii) merge, consolidate or acquire all
or substantially all of the assets of any person other than
subsidiaries of the Company and (iv) commencing with the quarter
ending December 31, 2017, limit the proportion of sales of
Housing Units under Wholesale Sales Contracts. The Credit
Agreement also contains events of default, subject to cure
periods in certain circumstances, including, among others, (a)
failure to pay principal, interest and other amounts due, (b)
failure to perform any financial, negative or certain specified
affirmative covenants, (c) inaccuracy in any material respect of
any statement, representation or warranty by the Company or any
subsidiary in any loan document, (d) cross-default to
Indebtedness of $1.0 million or more, (e) certain changes of
control or changes in management of the Company, (f) certain
bankruptcy or other insolvency events, (g) certain events or
circumstances that could reasonably be expected to have a
material adverse effect and (h) unpaid or unstayed judgment or
attachment of $500,000 or more.
that, among other restrictions, limit the Companys ability to (i)
create, issue, incur or assume indebtedness, (ii) conduct
intercompany transfers, (iii) merge, consolidate or acquire all
or substantially all of the assets of any person other than
subsidiaries of the Company and (iv) commencing with the quarter
ending December 31, 2017, limit the proportion of sales of
Housing Units under Wholesale Sales Contracts. The Credit
Agreement also contains events of default, subject to cure
periods in certain circumstances, including, among others, (a)
failure to pay principal, interest and other amounts due, (b)
failure to perform any financial, negative or certain specified
affirmative covenants, (c) inaccuracy in any material respect of
any statement, representation or warranty by the Company or any
subsidiary in any loan document, (d) cross-default to
Indebtedness of $1.0 million or more, (e) certain changes of
control or changes in management of the Company, (f) certain
bankruptcy or other insolvency events, (g) certain events or
circumstances that could reasonably be expected to have a
material adverse effect and (h) unpaid or unstayed judgment or
attachment of $500,000 or more.
If any default occurs under the Credit Agreement, the Company may
be unable to borrow funds under the Credit Agreement. In
addition, upon the occurrence of any event of default, the
Lenders may, at their sole option, declare all sums owing to the
Lenders under the Credit Agreement immediately due and payable.
be unable to borrow funds under the Credit Agreement. In
addition, upon the occurrence of any event of default, the
Lenders may, at their sole option, declare all sums owing to the
Lenders under the Credit Agreement immediately due and payable.
The description set forth above is qualified in its entirety by
reference to the Credit Agreement, a copy of which is filed as
Exhibit 10.1 to this Current Report and incorporated herein by
reference.
reference to the Credit Agreement, a copy of which is filed as
Exhibit 10.1 to this Current Report and incorporated herein by
reference.
Item 1.02 Termination of a Material Definitive Agreement.
The Credit Agreement amended and restated in its entirety that
certain Amended and Restated Credit Agreement, dated as of May
27, 2016, (as amended and supplemented to date, the 2016 Credit
Agreement), by and among the Company, each of
certain Amended and Restated Credit Agreement, dated as of May
27, 2016, (as amended and supplemented to date, the 2016 Credit
Agreement), by and among the Company, each of
the financial institutions signatory thereto, and Wells Fargo
Bank, National Association, as administrative agent, with Wells
Fargo Securities, LLC, as sole Lead Arranger and sole Bookrunner,
and Deutsche Bank Securities Inc. and Fifth Third Bank, as
Documentation Agents.
Bank, National Association, as administrative agent, with Wells
Fargo Securities, LLC, as sole Lead Arranger and sole Bookrunner,
and Deutsche Bank Securities Inc. and Fifth Third Bank, as
Documentation Agents.
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Item 2.03
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Creation of a Direct Financial Obligation or an Obligation
under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth under Item 1.01 above is incorporated
by reference into this Item 2.03.
by reference into this Item 2.03.
Item 9.01 Financial Statements and Exhibits.
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(d)
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Exhibits.
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EXHIBIT NUMBER
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DESCRIPTION
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10.1
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Second Amended and Restated Credit Agreement, dated as
of May 25, 2017, by and among LGI Homes, Inc., each of the financial institutions initially a signatory thereto, and Wells Fargo Bank, National Association, as administrative agent, with Wells Fargo Securities, LLC, as sole Lead Arranger and sole Bookrunner, and Fifth Third Bank, as Documentation Agent. |
About LGI HOMES, INC. (NASDAQ:LGIH)
LGI Homes, Inc. is a homebuilder. The Company is engaged in the design, construction, marketing and sale of new homes in markets in Texas, Arizona, Florida, Georgia, New Mexico, South Carolina, North Carolina, Colorado, Washington and Tennessee. The Company has five segments: the Texas division, the Southwest division, the Southeast division, the Florida division and the Northwest division. The Texas division includes homebuilding operations in Houston, Dallas/Fort Worth, San Antonio and Austin locations. The Southwest division includes homebuilding operations in Phoenix, Tucson, Albuquerque, Denver and Colorado Springs locations. The Southeast division includes homebuilding operations in Atlanta, Charlotte and Nashville locations. The Florida division includes homebuilding operations in Tampa, Orlando, Fort Myers and Jacksonville locations. The Northwest division includes homebuilding operations in Seattle location. Its product offerings include entry-level homes and move-up homes. LGI HOMES, INC. (NASDAQ:LGIH) Recent Trading Information
LGI HOMES, INC. (NASDAQ:LGIH) closed its last trading session up +0.01 at 32.41 with 143,733 shares trading hands.
