8-KOther EventsExhibits & Filings

HORTON D R INC /DE/ 8-K Report, Corporate Update (May 22, 2008)

Filed May 22, 2008For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) has announced a significant debt restructuring initiative through an exchange offer and consent solicitation related to its outstanding 9.75% Senior Subordinated Notes due 2010. The company is offering to exchange these existing notes, totaling $113.5 million in principal, for newly issued 9.75% Senior Notes due 2010. This move aims to simplify the company's debt structure by converting subordinated notes into senior notes with similar interest rates and maturity dates. Crucially, this exchange is coupled with a solicitation of consents to amend the indenture governing the existing notes. The proposed amendment seeks to remove several restrictive covenants, including limitations on incurring additional debt and paying dividends. This could provide D.R. Horton with greater financial flexibility. Investors should pay close attention to the expiration dates of the consent solicitation (June 4, 2008) and the exchange offer (June 19, 2008), as well as the condition that holders of a majority of the outstanding Existing Notes must consent to the amendments for the offer to proceed.

Key Highlights

  • 1D.R. Horton is launching an offer to exchange $113.5 million of its 9.75% Senior Subordinated Notes due 2010 for new 9.75% Senior Notes due 2010.
  • 2The exchange aims to convert subordinated debt into senior debt with identical interest rates and maturity dates.
  • 3A consent solicitation is being conducted concurrently to amend the indenture of the existing notes.
  • 4The proposed amendment would remove restrictive covenants, including those on debt incurrence and dividend payments.
  • 5Holders tendering notes and consenting before the consent solicitation expiration (June 4, 2008) will receive a $10 per $1,000 principal amount cash payment.
  • 6The exchange offer is conditioned on receiving tenders and consents from holders representing a majority in principal amount of the outstanding Existing Notes.
  • 7The consent solicitation expires on June 4, 2008, and the exchange offer expires on June 19, 2008, unless extended.

Frequently Asked Questions

D.R. Horton is offering to exchange all of its outstanding 9.75% Senior Subordinated Notes due 2010, totaling $113.5 million, for newly issued 9.75% Senior Notes due 2010. Alongside this, they are soliciting consents to amend the indenture governing the existing notes.

The primary benefit for the company is to elevate the status of this debt from 'Senior Subordinated' to 'Senior'. While the interest rate and maturity remain the same, the new notes and their guarantees will be senior obligations, potentially improving the company's debt profile. For investors who participate, they will receive the same principal amount, the same interest rate, and a small cash payment ($10 per $1,000 principal) if they tender and consent before the consent solicitation deadline.

The consent solicitation aims to gather consent from noteholders to amend the indenture of the existing notes. The key change being sought is the elimination of several restrictive covenants, which would give D.R. Horton more flexibility in incurring additional debt and making restricted payments like dividends.

The consent solicitation is scheduled to expire on June 4, 2008, at 5:00 p.m. New York City time. The exchange offer is scheduled to expire on June 19, 2008, at 5:00 p.m. New York City time. Both deadlines may be extended or terminated earlier.