Item 1.01.
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Entry into a Material Definitive Agreement.
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As previously reported, on November 5, 2019, William Lyon Homes, a Delaware corporation (“Parent”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Taylor Morrison Home Corporation, a Delaware corporation (“Taylor Morrison”), and Tower Merger Sub, Inc. (“Merger Sub”). In connection with the transactions related to the Merger Agreement, on December 5, 2019, Taylor Morrison Communities, Inc., a subsidiary of Taylor Morrison (“TMCI”), commenced exchange offers (the “Exchange Offers”) for any and all outstanding 6.00% Senior Notes due 2023 (the “2023 Notes”), 5.875% Senior Notes due 2025 (the “2025 Notes”) and 6.625% Senior Notes due 2027 (the “2027 Notes” and, together with the 2023 Notes and the 2025 Notes, the “Notes”) of William Lyon Homes, Inc., a California corporation and a wholly owned subsidiary of Parent (“California Lyon”) and consent solicitations (“Consent Solicitations”) in respect of certain proposed amendments (the “Amendments”) to (i) the indenture, dated as of March 9, 2018 (as amended, the “2023 Notes Indenture”), by and among California Lyon, the Guarantors (as defined below) and U.S. Bank National Association, as trustee (the “Trustee”), governing the 2023 Notes, (ii) the indenture, dated as of January 31, 2017 (as amended, the “2025 Notes Indenture”), by and among California Lyon, the Guarantors and the Trustee, governing the 2025 Notes and (iii) the indenture, dated as of July 9, 2019 (as amended, the “2027 Notes Indenture” and, together with the 2023 Notes Indenture and the 2025 Notes Indenture, the “Indentures”), by and among California Lyon, the Guarantors and the Trustee, governing the 2027 Notes.
In connection with the Exchange Offers and Consents Solicitations, on December 18, 2019, California Lyon, Parent and certain of their subsidiaries (together with Parent, the “Guarantors”) entered into (i) Supplemental Indenture No. 2 (the “2023 Notes Supplemental Indenture”) to the 2023 Notes Indenture, (ii) Supplemental Indenture No. 2 (the “2025 Notes Supplemental Indenture”) to the 2025 Notes Indenture and (iii) Supplemental Indenture No. 1 (the “2027 Notes Supplemental Indenture” and, together with the 2023 Notes Supplemental Indenture and the 2025 Notes Supplemental Indenture, the “Supplemental Indentures”) to the 2027 Notes Indenture.
The Supplemental Indentures, when they become operative, will effect the Amendments, which will (i) eliminate substantially all of the covenants contained in the Indentures, (ii) eliminate certain events of default, (iii) modify covenants regarding mergers and transfer of all or substantially all of the assets of Parent and its restricted subsidiaries, (iv) eliminate certain other restrictive provisions contained in such Indentures and the Notes and (v) reduce the minimum notice period required to optionally redeem the Notes from 30 days to three Business Days.
The Amendments to the Indentures will not become operative unless and until (i) TMCI or California Lyon notifies the Trustee for the applicable Notes that TMCI has delivered to The Depository Trust Company for the holders of such Notes the aggregate amount to be paid to such holders as consent payments, upon the terms and subject to the conditions in TMCI’s offering memorandum and consent solicitation statement, dated December 5, 2019 (the “Offering Memorandum”), or TMCI’s separate consent solicitation statement, dated December 5, 2019, as applicable, in respect of the consents validly delivered and not revoked thereunder and (ii) the Notes that are validly tendered (and not validly withdrawn) in the Exchange Offers have been accepted for exchange by TMCI in accordance with the terms of the Offering Memorandum. If and when the Amendments become operative, the Notes that were not tendered will remain outstanding and will be subject to the terms of the Indentures as modified by the Supplemental Indentures.
The foregoing descriptions of the Supplemental Indentures and the Amendments do not purport to be complete and are qualified in their entirety by reference to the 2023 Notes Supplemental Indenture, the 2025 Notes Supplemental Indenture and the 2027 Notes Supplemental Indenture, copies of which are attached as Exhibit 4.1, 4.2 and 4.3, respectively, to this Current Report on Form 8-K and incorporated herein by reference.