Summary
This 8-K filing by D. R. Horton, Inc. (DHI) on September 30, 2005, reports on material definitive agreements entered into by its subsidiaries, DHI Mortgage Company, Ltd. and CH Funding LLC. These agreements involve amendments to existing credit facilities to temporarily increase borrowing capacity. Specifically, the Credit Facility's capacity was raised to $675 million and the CP Facility's capacity to $700 million, with these temporary increases scheduled to revert to lower levels in the following months. These amendments are primarily aimed at managing short-term liquidity needs and are secured by mortgage loans held for sale, with no direct guarantee from the parent company.
Key Highlights
- 1DHI's subsidiary, DHI Mortgage Company, Ltd., amended its Credit Facility, increasing temporary capacity to $675 million.
- 2This temporary capacity increase for the Credit Facility is available in phases from late September to late October 2005.
- 3DHI's subsidiary, CH Funding LLC, amended its Master Repurchase Agreement (CP Facility), increasing temporary capacity to $700 million.
- 4The temporary capacity increase for the CP Facility is available in phases from late September to mid-October 2005.
- 5Both the Credit Facility and CP Facility are secured by mortgage loans held for sale and are not guaranteed by D.R. Horton, Inc.
- 6The temporary increases in borrowing capacity are structured to revert to lower levels in November 2005.
- 7These amendments reflect a strategic management of short-term financing and liquidity.
Frequently Asked Questions
The primary purpose of these amendments is to temporarily increase the borrowing capacity of DHI Mortgage Company, Ltd. and CH Funding LLC. This allows the subsidiaries to have access to additional funds for their operations, particularly for managing liquidity needs related to mortgage loan inventory.
No, the increased borrowing limits are temporary. The Credit Facility's capacity will revert to $450 million by November 1, 2005, and then to $300 million thereafter. The CP Facility's capacity will decrease in stages, returning to $500 million by November 11, 2005.
No, the filing explicitly states that neither D.R. Horton, Inc. nor any guarantors of its Senior and Senior Subordinated Notes provide a guarantee for either the Credit Facility or the CP Facility. The obligations are solely of the respective subsidiaries and are secured by their assets.
Both the Credit Facility and the CP Facility are secured by certain mortgage loans held for sale by the respective subsidiaries. For the CP Facility, these mortgage loans are used as collateral for asset-backed commercial paper issued in the market.