M.D.C. Holdings Inc.
11/22/2024 | Press release | Distributed by Public on 11/22/2024 15:04
Material Agreement Form 8 K
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT
On November 19, 2024, M.D.C. Holdings, Inc. (the "Company") entered into a Credit Agreement (the "Credit Agreement") with the lenders party thereto, U.S. Bank National Association, as Administrative Agent, U.S. Bank National Association, Mizuho Bank, Ltd., Truist Securities, Inc., Wells Fargo Securities, LLC, BMO Bank N.A. and PNC Capital Markets LLC, as co-syndication Agents, Joint Lead Arrangers and Joint Book Runners. The Credit Agreement supersedes and replaces the Credit Agreement, dated as of December 13, 2013 and as amended as of December 17, 2014, December 18, 2015, September 29, 2017, November 1, 2018, December 28, 2020 and, April 11, 2023 and March 20, 2024, by and among the Company, the lenders party thereto, U.S. Bank National Association, as designated agent and co-administrative agent, Citibank, N.A., as co-administrative agent, and Truist Bank, BMO Bank N.A. and PNC Bank, National Association, as co-syndication agents, and U.S. Bank National Association, Citibank, N.A., Truist Securities, Inc., BMO Bank and PNC Capital Markets LLC, as Joint Lead Arrangers and Joint Book Runners (the "Prior Credit Agreement"), which provided for a senior unsecured revolving credit facility of up to $1.125 billion.
The Credit Agreement provides the Company with a senior unsecured revolving credit facility (the "Credit Facility") of up to $900 million. The Credit Facility includes a $195 million sublimit for letters of credit. Subject to the terms and conditions of the Credit Agreement, the Company is entitled to request an increase in the size of the Credit Facility by an amount not exceeding $500 million. If the existing lenders elect not to provide the full amount of a requested increase, the Company may invite one or more other lender(s) to become a party to the Credit Agreement, subject to the approval of the Administrative Agent and each letter of credit issuer. The obligations under the Credit Agreement are guaranteed by certain of the Company's subsidiaries. Funds are available under the Credit Facility for general corporate purposes. As of September 30, 2024, $1 million was outstanding under the Prior Credit Agreement.
Unless terminated earlier, the Credit Facility will mature on November 17, 2028, and the principal amount thereunder, together with all accrued unpaid interest and other amounts owing thereunder, if any, will be payable in full on such date.
Borrowings under the Credit Agreement bear interest at a floating rate equal to Term SOFR or Daily Simple SOFR (in each case as defined in the Credit Agreement), plus an applicable margin between 1.125% and 1.625% per annum, or if selected by the Company, a base rate plus an applicable margin between 0.125% and 0.625% per annum. The "applicable margins" described above are determined by a schedule based on the leverage ratio of the Company, as defined in the Credit Agreement. The Credit Agreement also provides for customary fees including commitment fees payable to each lender ranging from 0.15% to 0.30% per annum based on the Company's leverage ratio.
The Credit Agreement contains customary affirmative and negative covenants, including, among other matters, limitations on the Company's ability to grant liens, incur additional debt, pay dividends, make certain investments, issue certain equity securities, engage in transactions with affiliates and engage in certain merger, consolidation or asset sale transactions, subject to certain exceptions. The Credit Agreement also requires the Company to maintain: (i) a maximum leverage ratio of not greater than 60% as of the last day of any fiscal quarter (ii) a minimum interest coverage ratio of not less than 1.50 to 1.00 as of the last day of any fiscal quarter and (iii) a consolidated tangible net worth of not less than the sum of approximately $2.0 billion, plus 50% of the net proceeds of any issuances of equity interests of the Company after June 30, 2024, plus 50% of the amount of quarterly net income of the Company and its subsidiaries, after June 30, 2024.
The Credit Agreement also contains customary events of default, including, without limitation, payment defaults, material inaccuracy of representations and warranties, covenant defaults, bankruptcy and insolvency proceedings, cross-defaults to certain other agreements, breach of any financial covenant and change of control. Upon the occurrence and during the continuance of any event of default, the Administrative Agent, with the consent or at the direction of the required lenders, may accelerate the payment of the obligations thereunder and exercise various other customary default remedies.
U.S. Bank National Association, Mizuho Bank, Ltd., Truist Securities, Inc., Wells Fargo Securities, LLC, BMO Bank N.A. and PNC Capital Markets LLC all received customary compensation for their roles in the transaction. Certain of these parties, as well as the Administrative Agent and certain of the other lenders and their respective affiliates have in the past performed and may in the future from time to time perform, investment banking, financial advisory, lending and/or commercial banking services for the Company and its subsidiaries, for which service they have in the past received, and may in the future receive, customary compensation and reimbursement of expenses.
The foregoing description of the Credit Agreement is a summary of the material terms of such agreement, does not purport to be complete and is qualified in its entirety by reference to the complete terms of the Credit Agreement, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.