S&P: Meritage Homes unaffected

Standard & Poor's said that its ratings assigned to Meritage Homes Corp. would not be immediately affected by its recent announcement that it intends to issue new equity and refinance debt.

Meritage recently priced $350 million 6.25% senior unsecured notes due 2015 and 900,000 shares of its common stock at $70.35 per share. The company also announced an additional offering of 600,000 shares by its co-chief executive officers, for which Meritage will not receive proceeds. Meritage's total proceeds from these transactions will total about $413 million and will be used, in part, to finance the company's previously announced offer to repurchase up to all of its $280 million in outstanding principal amount of 9.75% senior notes due 2011.

Along with this purchase offer, Meritage announced it is seeking consent from noteholders to alter or eliminate several of the restrictive covenants and certain events of default in the indenture, including certain limitations on debt. The balance of proceeds will be used to repay balances outstanding under the company's $400 million unsecured revolver, a portion of which was used to fund the company's recent acquisition of Colonial Homes.

S&P said that if successfully completed, these capital markets transactions will modestly improve Meritage's financial profile by incrementally reducing relative debt levels and lowering interest costs.

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