KB Home gets consents to amend all senior notes

New York, Nov. 9 - KB Home announced that it had received consents to amend all five series of its $1.65 billion of outstanding senior notes.

The company had previously said it received consents from holders of $1,190,137,000 principal amount, or 72.1%, of the notes, including holders of a majority of each series of the notes except its 5 7/8% senior notes due 2015. As a result, the company extended the consent solicitation for the 5 7/8% notes by one day.

The original consent deadline was 5 p.m. ET on Nov. 7. The deadline for the 5 7/8% notes was extended to 5 p.m. ET on Nov. 8. The company said it would not further extend or modify the consent solicitation.

KB Home was soliciting consents to suspend until Feb. 23 any event of default triggered by the company's failure to file on time its 10-Q report for the quarter ended Aug. 31 with the Securities and Exchange Commission.

On Nov. 6, a group of KB noteholders had said that it would not submit consents in the solicitation.

The group of noteholders was lead by Whitebox Advisors, which said KB Home's current proposal significantly undervalues the contractual rights that bondholders would be giving up.

At the time, Whitebox said companies in similar circumstances have repeatedly offered more and cited several cases in which companies agreed to pay par (Navistar International Corp., SafeNet Inc., Saks Inc.), offered substantial consent fees (Novell Inc.'s offer of 575 basis points) or materially raised their coupon (BearingPoint Inc., an increase of 135 bps).

Whitebox, along with one other holder, holds 36% of the company's 6¼% bonds. Whitebox said on Nov. 6 that it also received oral commitments to withhold consents from holders of 39% of KB Home's 5 7/8% bonds.

KB Home received a notice of default for its 7¼% senior notes due 2018 for failure to file its 10-Q for the quarter ended Aug. 31 from an entity claiming to manage funds that own more than 25% of the notes. The company has 60 days to cure the default, and if it fails to do so, bondholders have the right to accelerate the bonds.

The consent would include waiver of cross-defaults. Whitebox said that because KB Home faces defaults on five bond issues, waiving cross-default provisions in one issue could involve substantial economic loss resulting from possible subordination if other issues are accelerated.

KB Home has not filed the 10-Q report because it has not completed an internal review of its historical stock option grants and related accounting, according to a company news release. KB Home intends to file the 10-Q report on or before Dec. 24.

Global Bondholder Services Corp. (866 470-3800 or 212 430-3774) is information agent and tabulation agent for the consent solicitation. Banc of America Securities LLC (888 292-0070 or 704 388-4813) and Citigroup Corporate and Investment Banking (800 558-3745) are joint solicitation agents.

KB Home is a Los Angeles-based builder of single-family homes.

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