New Home enters $125 million three-year replacement credit facility

By Marisa Wong

Madison, Wis., July 2 – New Home Co. Inc. entered into a $125 million senior unsecured credit facility on June 26 with U.S. Bank NA d/b/a Housing Capital Co., according to an 8-K filing with the Securities and Exchange Commission.

The credit facility matures on June 26, 2017 with the potential for a one-year extension, subject to specified conditions and an extension fee.

The interest rate will be Libor plus an applicable margin, ranging from 225 basis points to 300 bps, depending on the company’s leverage ratio.

The credit facility contains some financial covenants requiring the company to maintain the following on a quarterly basis: a minimum tangible net worth requirement of $106.8 million; a leverage ratio of less than 0.75 to 1.00; an adjusted leverage ratio of less than 1.25 to 1.00; minimum liquidity equal to or greater than $5 million; a fixed-charge coverage ratio of at least 1.50 to 1.00; and from and after Jan. 1, 2015, a spec unit test not to exceed 50% of the number of new home deliveries during the preceding 12 months or 100% of the number of new home deliveries during the preceding six-month period.

The credit facility replaces New Home’s prior $30 million secured revolving credit facility and may be used for general corporate purposes.

The homebuilder is based in Aliso Viejo, Calif.

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