Forestar Group Inc. (“Forestar”) (NYSE: FOR), a subsidiary of D.R. Horton, announced Friday that it has entered into a three-year $380 million senior unsecured revolving credit facility.
The facility has an uncommitted $190 million accordion feature which could increase the facility to $570 million, subject to certain conditions and availability of additional bank commitments. The facility includes a letter of credit sublimit equal to 50% of the revolving credit commitment, for an initial sublimit of $190 million.
The facility includes financial covenants that require the company to maintain a minimum level of tangible net worth, a minimum level of liquidity and a leverage ratio below a maximum level. The pricing schedule for outstanding commitments, borrowings and letters of credit is based on the company’s leverage ratio. Availability under the facility is subject to a borrowing base determined by the book value of the company’s real estate assets and unrestricted cash balances.
JPMorgan Chase Bank, N.A., Citibank, N.A., Mizuho Bank, Ltd. and Wells Fargo Securities, LLC acted as Joint Lead Arrangers and Joint Bookrunners.
Donald J. Tomnitz, chairman of the board, said, “We are excited about our growth opportunities and believe this is an opportune time to add a revolving credit facility to Forestar’s capital structure. We appreciate the commitment our valued bank lenders are making to Forestar and their support of our business.”
