Meritage Homes restates credit facility for $400 million revolver

By Marisa Wong

Madison, Wis., June 16 – Meritage Homes Corp. entered into an amended and restated credit facility on June 13 for an up to $400 million four-year revolving facility, according to an 8-K filing with the Securities and Exchange Commission.

Of the total lending commitments, $200 million will be available for letters of credit.

In addition, the revolver has an accordion feature that would allow the company to increase the total commitment up to a maximum amount of $100 million.

The facility matures June 13, 2018.

Interest is equal to Libor plus 175 basis points to 225 bps, depending on the company’s gross leverage ratio.

There is a commitment fee of 40 bps to 50 bps, also based on the leverage ratio.

At closing, substantially all of the company’s 100% owned subsidiaries were guarantors of the revolver.

Availability is subject to, among other things, a borrowing base.

The facility also contains some financial covenants, including a minimum tangible net worth requirement of $670.3 million and a maximum leverage covenant that prohibits the leverage ratio from exceeding 60%.

In addition, the company is required to maintain either an interest coverage ratio of at least 1.50 to 1.00 or liquidity of an amount not less than the company’s consolidated interest incurred during the last 12 months.

The facility amends, restates and replaces the company’s previous $200 million revolving credit facility. At closing, the company had outstanding letters of credit totaling $28.9 million, leaving $371.1 million under the revolver available to be drawn.

J.P. Morgan Securities LLC and Citigroup Global Markets Inc. are the joint lead bookrunners and, along with Deutsche Bank Securities Inc., Merrill Lynch Pierce, Fenner & Smith Inc., Royal Bank of Canada and PNC Capital Markets, LLC, joint lead arrangers for the new revolver.

JPMorgan Chase Bank, NA is the administrative agent; Citibank, NA is the syndication agent; and Deutsche Bank Securities Inc., Merrill Lynch Pierce, Fenner & Smith, PNC Capital Markets, LLC, Royal Bank of Canada, U.S. Bank NA and Regions Bank are the documentation agents.

Meritage is a real estate development company based in Scottsdale, Ariz.

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