Technical Olympic gets commitment for $500 million in term loans

By Sara Rosenberg

New York, May 17 - Technical Olympic USA Inc. has received a commitment for $500 million in new term loan debt, according to an 8-K filed with the Securities and Exchange Commission Thursday.

Citigroup is the lead arranger, bookrunner and administrative agent on the deal.

The facility consists of a $250 million first-lien term loan and a $250 million second-lien term loan.

In addition, as a condition to the new deal, the company's existing revolving credit facility will be amended and restated to reduce the size to $700 million from $800 million, incorporate the terms and conditions of the first-lien term loan, and allow for the new bank debt.

Financial covenants will include a minimum interest coverage ratio, minimum adjusted consolidated tangible net worth, a maximum indebtedness to adjusted consolidated tangible net worth ratio, unsold land to adjusted consolidated tangible net worth requirements, minimum unsold units to units sold and maximum land supply ratio.

Proceeds will be used to fund any settlements related to the Transeastern joint venture.

As part of settlement discussions, the company has proposed a structure in which either Transeastern or the successor to some or all of its assets would become the Technical Olympic's wholly or majority owned subsidiary. The proposal also contemplates paying Transeastern's $400 million of senior debt in full through the proceeds from the new term loans.

The company has until May 28 to execute the commitment letter for it to become effective, and will only execute the letter if satisfactory settlements with the Transeastern creditors have been reached.

If the commitment is executed, the company has until July 31 to execute definitive documentation.

Technical Olympic is a Hollywood, Fla., designer, builder and marketer of single-family residences, town homes and condominiums.

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