New Home launches exchange offer for 7¼% senior notes due 2025

By Mary-Katherine Stinson

Lexington, Ky., May 31 – New Home Co. Inc. launched a private exchange offer to certain eligible holders to exchange any and all of the company’s $230,467,000 outstanding 7¼% senior notes due Oct. 15, 2025 (Cusips: 645370AC1, U64307AC2) for new 8¼% senior notes due Oct. 15, 2027, according to a press release.

For each $1,000 principal amount of existing notes tendered at or prior to the early tender date, holders will be eligible to receive the total consideration of $1,000 principal amount of exchange notes inclusive of an early tender premium payable in exchange notes equal to $50, plus a consent payment of $20 in cash.

Holders tendering after the early tender date but before the expiration will only be eligible to receive $950 principal amount of exchange notes for each $1,000 principal amount of existing notes tendered.

Holders that validly tender their notes after the early tender date will not be eligible to receive the consent payment or the early tender premium.

Accrued interest will also be paid.

The exchange notes will accrue interest at an annual rate of 8¼% beginning with the settlement date and ending on Oct. 14, 2025, 11% beginning on Oct. 15, 2025 through Oct. 14, 2026, and 12¼% beginning on Oct. 15, 2026 to, but excluding, the maturity date.

The exchange notes will initially be guaranteed by the same entities that guarantee the existing notes.

The early tender date is 5 p.m. ET on June 14, which is also the withdrawal deadline.

The exchange offer and consent solicitation will expire at 5 p.m. ET on June 29. Settlement is expected on the third business day after the expiration date.

Through privately negotiated noteholder support agreements holders of approximately 63% of the existing notes have committed to tender all their existing notes at or prior to the early tender date.

Solicitation

Tendering noteholders will be deemed to have consented in a related consent solicitation.

As part of the exchange offer, the company is soliciting consents with respect to the existing notes, to eliminate substantially all of the restrictive covenants and certain events of default in the indenture. The proposed amendments require the consent of the holders of at least a majority of the outstanding principal amount of existing notes excluding those notes owned by the company or by any holder directly or indirectly controlled by the company.

If the company receives the requisite consents to effect the proposed amendments following early tender date, the company and the trustee will enter into a supplemental indenture which will become effective upon execution but will not become operative until the settlement date. If the company does not receive the consents, the existing indenture will remain in effect in its current form.

However, the commitment from holders representing 63% of the existing notes means that the company expects to receive the requisite consents by the early deadline.

The company may complete the exchange offer even if the consents are not received, though it is not obligated to do so.

There is a minimum participation condition requiring that holders of at least 75% of the total principal amount of existing notes participate in the exchange offer, excluding any notes held by the company and its affiliates. It is also conditioned on the completion of an equity contribution in which funds managed by affiliates of Apollo Global Management, Inc. and/or one or more co-investors are expected to make a capital contribution to the company’s indirect parent totaling $25 million in exchange for additional equity in the form of common equity or comparable securities in the parent.

Global Bondholder Services Corp. is the exchange agent and information agent (866 654-2015, 212 430-3774, contact@gbsc-usa.com). Holders of existing notes wishing to certify that they are eligible holders should complete the online eligibility letter located at https://gbsc-usa.com/eligibility/newhomeco.

New Home is a homebuilder with is executive offices in Irvine, Calif.

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