Item
1.01. Entry
into a Material Definitive Agreement
On
July
25, 2007, Beazer Homes USA, Inc. (the “Company”) entered into a $500 million
(expandable up to $1 billion), four-year unsecured revolving credit (the
“Credit
Facility”) with Wachovia Bank National Association as Administrative Agent,
Citicorp North America, Inc. as Syndication Agent, BNP Paribas, The Royal
Bank
of Scotland and Guaranty Bank as Documentation Agents, Regions Bank as Senior
Managing Agent and JPMorgan Chase Bank, N.A. as Managing Agent, and the
following other Lenders: City National Bank, PNC Bank, N.A. UBS Loan Finance,
LLC and Comerica Bank. The Credit Facility will replace the Company’s existing
revolving credit facility (referenced in Item 1.02), and will be used for
general corporate purposes of the Company and its subsidiaries. All of the
lenders named above, directly or through affiliates, have pre-existing
relationships with the Company.
The
principal amount of the loans under the Credit Facility may not exceed $500
million; provided, that at any time within four years of the closing date,
the
Company may request increases, subject to agent approval, in the aggregate
commitments of the lenders, up to an amount not to exceed $1 billion. The
Credit
Facility includes a $25 million swing line commitment and has a $350 million
sublimit for the issuance of standby letters of credit. Substantially all
of the
Company’s significant subsidiaries (as defined in the Credit Facility) are
guarantors of the obligations under the Credit Facility. Each guarantor
subsidiary is a 100% owned subsidiary of the Company.
The
Credit Facility contains customary representations, warranties and covenants,
including covenants limiting liens, guaranties, mergers and consolidations,
substantial asset sales, investments and loans, sale and leasebacks and other
fundamental changes. In addition, the Credit Facility contains covenants
to the
effect that (i) the Company will maintain a minimum consolidated tangible
net
worth (as defined in the Credit Facility) of $1 billion, increasing by 50%
of
net income in future periods, (ii) the Company shall maintain an interest
coverage ratio (as defined in the Credit Facility) of not less than 1.1 to
1.0
for any fiscal quarter ending on or before September 30, 2009, 1.5 to 1.0
for
the quarter ending December 31, 2009 and 1.75 to 1.0 thereafter, (iii) the
Company will not permit the leverage ratio (as defined in the Credit Facility)
to exceed 1.9 to 1.0 and (iv) the Company’s ratio of adjusted land value to the
sum of consolidated tangible net worth plus 50% of consolidated subordinated
debt (as those terms are defined in the Credit Facility) shall not exceed
1.25
to 1.0. At any time that the interest coverage ratio is less than 1.75 to
1.0 as
permitted by the Credit Facility, the Company is required to maintain
unrestricted cash not included in the borrowing base calculation plus borrowing
base availability (as those terms are defined in the Credit Facility) of
at
least $120 million. The Company’s borrowings under the Credit Facility may also
be limited based on the amount of borrowing base available.
In
the
event of a default by the Company under the Credit Facility, including
cross-defaults relating to specified other debt of the Company or its
consolidated subsidiaries equal to or exceeding $5 million, the lenders may
terminate the commitments under the Credit Facility and declare the amounts
outstanding, including all accrued interest and unpaid fees, payable
immediately. In addition, the lenders may enforce any and all rights and
remedies created under the Credit Facility or applicable law or equity,
including set-off rights. For events of default relating to insolvency,
bankruptcy or receivership, the commitments are automatically terminated
and the
amounts outstanding become payable immediately.
The
Company has the option to elect two types of loans under the Credit Facility.
If
the Company elects the Alternative Base Rate Loan (“ABR” as defined in the
Credit Facility), the Company’s rate per annum will be equal to the ABR in
effect from time to time as interest accrues. If the Company elects to borrow
U.S. dollars as a Eurodollar Loan, the Company’s rate per annum will be equal to
the Eurodollar Rate for such interest period adjusted for the Applicable
Eurodollar Margin (as defined in the Credit Facility). The applicable Eurodollar
Margin varies, depending on the Company’s leverage ratio and the ratings of its
senior unsecured long-term debt. During the term of the Credit Facility,
the
Company will pay a commitment fee to the Administrative Agent, for the account
of the Lenders, equal to (a) 0.25% if the average daily unused portion of
the
aggregate commitment during the fiscal quarter ending on or immediately prior
to
such date of determination equals or exceeds 50% of the aggregate commitment,
and (b) 0.20% if the average daily unused portion of the aggregate commitment
during the fiscal quarter ending on or immediately prior to such date of
determination is less than 50% of the aggregate commitment.
Loans
made and other obligations incurred under the Credit Facility will mature
on
July 25, 2011. The Company also issued a press release on July 26, 2007
announcing its entering into the Credit Facility, a copy of which is also
filed
herewith as exhibit 99.1 and incorporated herein by this reference.
Item
1.02. Termination
of a Material Definitive Agreement
The
Credit Facility replaced as of July 25, 2007 the existing Credit Agreement
dated
as of August 22, 2005 between the Company and the lenders parties thereto,
JPMorgan Chase Bank, N.A. as Administrative Agent, BNP Paribas, Guaranty
Bank
and Wachovia Bank, National Association as Syndication Agents, The Royal
Bank of
Scotland plc as Documentation Agent, Citicorp North America, Inc., Sun Trust
Bank and Washington Mutual Bank, FA as Managing Agents, Comerica Bank, PNC
Bank,
National Association and UBS Loan Finance LLC as Co-Agents and J.P. Morgan
Securities Inc. as Lead Arranger and Sole Bookrunner. There were $91.0 million
of letters of credit outstanding under the Credit Agreement that have been
transferred to the Credit Facility. There were no other borrowings outstanding
under this credit facility at the time of termination. The material
relationships described in Item 1.01 are incorporated herein by
reference.
Item
2.02. Results
of Operations and Financial Condition
On
July
26, 2007, Beazer Homes USA, Inc. reported earnings and results of operations
for
the quarter ended June 30, 2007. A copy of the press release is attached
hereto
as exhibit 99.2. For additional information, please see the press
release.
Item
2.03 Creation
of a Direct Financial Obligation or an Obligation under an Off-Balance
Sheet Arrangement
The
disclosure contained in Item 1.01 is incorporated herein by
reference.
Item
9.01 Financial
Statements and Exhibits
(d)
Exhibits
| 10.1 |
Credit
Agreement dated as of July 25, 2007 among Beazer Homes USA,
Inc., the
Lenders Parties Thereto, Wachovia Bank, National Association,
as Agent,
BNP Paribas, The Royal Bank of Scotland and Guaranty Bank,
as
Documentation Agents and Regions Bank, as Senior Managing Agent
and
JPMorgan Chase Bank, N.A., as Managing
Agent
|
| 99.1 |
Press
Release announcing entering into Credit Facility dated July
26,
2007.
|
| 99.2 |
Press
Release announcing financial results for the quarter ended June
30, 2007
dated July 26, 2007.
|