KB Home enters $310 million four-year delayed-draw term loan

By Marisa Wong

Los Angeles, Aug. 31 – KB Home entered into a $310 million senior unsecured term loan on Aug. 25, according to an 8-K filing with the Securities and Exchange Commission.

The company did not draw under the term loan at closing but may draw up to $310 million at any time through Nov. 23.

In some cases, the aggregate commitment under the term loan may be increased to up to $400 million.

The term loan will mature on Aug. 25, 2026 or earlier, if the company secures the loans under its unsecured revolver without similarly securing the term loan.

Interest will equal adjusted term SOFR plus a spread ranging from 135 basis points to 190 bps, depending on the company’s leverage ratio.

The term loan contains financial covenants relating to tangible net worth, leverage, liquidity or interest coverage and borrowing base.

Loan proceeds are required to be guaranteed by some of the company’s subsidiaries and are intended to be used to redeem, purchase or repay the company’s 7 5/8% senior notes due May 15, 2023 and for working capital and other general corporate purposes.

Wells Fargo Bank, NA is the administrative agent and also a lender.

Wells Fargo Securities, LLC is the lead arranger and bookrunner.

Bank of the West, Fifth Third Bank, NA and U.S. Bank NA are documentation agents.

The homebuilder is based in Los Angeles.

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