8-KMaterial AgreementsShareholder MattersOther Events+1

HORTON D R INC /DE/ 8-K Report, Material Agreement (Jun 5, 2008)

Filed June 5, 2008For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) filed an 8-K on June 5, 2008, detailing a significant amendment to its outstanding debt agreements. The company successfully completed a consent solicitation to modify the indenture governing its 9.75% Senior Subordinated Notes due 2010. This modification, executed through a Seventh Supplemental Indenture, primarily aims to eliminate restrictive covenants related to indebtedness, restricted payments, and affiliate transactions. This action is directly tied to DHI's ongoing exchange offer, where it is offering to swap up to $113.5 million in aggregate principal amount of these existing notes for new 9.75% Senior Notes due 2010. The elimination of these covenants is a key step in making the exchange offer operative and potentially provides DHI with greater financial flexibility. Investors should monitor the consummation of the exchange offer and its impact on the company's financial structure and future borrowing capacity.

Key Highlights

  • 1D.R. Horton executed a Seventh Supplemental Indenture to amend the terms of its 9.75% Senior Subordinated Notes due 2010.
  • 2The primary amendment removes restrictive covenants on indebtedness, restricted payments, and affiliate transactions.
  • 3The company has received the necessary consents from noteholders to approve these indenture amendments.
  • 4This amendment is a condition for the company's ongoing exchange offer of existing notes for new 9.75% Senior Notes due 2010.
  • 5The exchange offer is for up to $113.5 million in aggregate principal amount of notes.
  • 6The expiration date for the exchange offer and consent solicitation is June 19, 2008, unless extended.
  • 7The executed Seventh Supplemental Indenture is effective upon the consummation of the exchange offer.

Frequently Asked Questions

The main purpose is to eliminate several restrictive covenants in the original indenture governing the 9.75% Senior Subordinated Notes due 2010. These covenants previously restricted the company's ability to incur additional debt, make certain payments, and engage in specific transactions with affiliates.

The successful amendment of the indenture is a prerequisite for the company's exchange offer. D.R. Horton is offering to exchange its existing senior subordinated notes for new senior notes. The elimination of restrictive covenants is intended to facilitate this exchange and potentially offer DHI more operational and financial flexibility.

The exchange offer involves up to $113.5 million in aggregate principal amount of the company's outstanding 9.75% Senior Subordinated Notes due 2010.

The exchange offer and consent solicitation are set to expire on June 19, 2008, unless D.R. Horton decides to extend the period.