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Published on 6/29/2007 in the Prospect News Bank Loan Daily.

Technical Olympic $500 million in term loans expected as July business

By Sara Rosenberg

New York, June 29 - Technical Olympic USA Inc. is expected to hold a bank meeting sometime in July to launch its proposed $500 million in new term loan debt, according to a market source.

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

The debt is comprised of a $200 million first-lien term loan and a $300 million second-lien term loan.

This structure is slightly different than the one that the company outlined back in May, which called for 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 and allow for the new bank debt.

Security will be substantially all of the company's assets.

Financial covenants will include minimum adjusted consolidated tangible net worth, maximum ratio of debt adjusted consolidated tangible net worth, minimum ratio of EBITDA to interest incurred, maximum ratio of units owned to units closed, maximum ratio of land to adjusted consolidated tangible net worth, maximum ratio of unsold units to units closed, maximum ratio of outstanding secured debt and letters of credit to book value of inventory.

Proceeds will be used to fund settlements related to the Transeastern joint venture, including the repayment of Transeastern's $400 million of senior debt in full.

As part of the settlement, Transeastern will become wholly owned by the company and merged into one of its subsidiaries.

The settlement is expected to close on or about July 31.

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


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