CalAtlantic gets $750 million four-year revolver at Libor plus 175 bps

By Angela McDaniels

Tacoma, Wash., Oct. 5 – CalAtlantic Group, Inc. entered into a new credit agreement on Monday that provides for a $750 million revolving credit facility due Oct. 5, 2019, according to an 8-K filing with the Securities and Exchange Commission.

CalAtlantic was created on Monday through the merger of Standard Pacific Corp. and Ryland Group, Inc.

The revolver replaces Standard Pacific’s $450 million revolver and Ryland’s $300 million revolver, which were terminated.

The new revolver has a $350 million sublimit for letters of credit and a $450 million accordion feature.

The initial interest rate is Libor plus 175 basis points, and the initial commitment fee is 30 bps. The margin over Libor ranges from 150 bps to 200 bps, and the commitment fee ranges from 25 bps to 35 bps. Both depend on the company’s leverage ratio.

J.P. Morgan Securities LLC and Citigroup Global Markets Inc. are the joint lead bookrunners and, along with Bank of the West, Mizuho Bank Ltd. and Bank of America Merrill Lynch, joint lead arrangers. JPMorgan Chase Bank, NA is the administrative agent. Citibank, NA, Bank of the West, Mizuho Bank and Bank of America, NA are the co-syndication agents.

The revolver contains financial and other covenants, including a minimum tangible net worth requirement of $1.65 billion, a net homebuilding leverage covenant that prohibits the leverage ratio from exceeding 2 to 1 and a land covenant that limits land not under development to an amount not to exceed tangible net worth. The company is also required to maintain either (a) a minimum liquidity level or (b) a minimum interest coverage ratio of at least 1.25 to 1.00.

On the closing date, no borrowings were outstanding and the company had outstanding letters of credit issued under the revolver totaling $90.8 million, leaving $659.2 million available to be drawn.

CalAtlantic is a homebuilder based in Irvine, Calif.

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