Summary
D.R. Horton, Inc. (DHI) filed an 8-K on March 10, 2009, detailing a significant amendment to its Master Repurchase Agreement through its subsidiary, DHI Mortgage Company, Ltd. This amendment, effective March 5, 2009, restructures the existing repurchase facility, primarily by having U.S. Bank National Association assume the roles previously held by JPMorgan Chase Bank and other exiting buyers. The facility is crucial for providing DHI Mortgage with financing and liquidity by allowing it to transfer eligible loans in exchange for funds.
Key Highlights
- 1DHI Mortgage Company, Ltd. entered into a First Amendment to its Master Repurchase Agreement.
- 2U.S. Bank National Association has become the sole buyer and administrative agent, with JPMorgan Chase Bank exiting the facility.
- 3The repurchase facility's primary purpose remains to provide financing and liquidity to DHI Mortgage through loan purchase transactions.
- 4The maximum aggregate commitment under the facility has been set at $75 million, with a temporary increase to $100 million during specific fiscal quarter periods.
- 5The agreement includes specific interest rate structures for advances and facility fees payable by DHI Mortgage.
- 6Covenants have been amended, including a minimum Tangible Net Worth requirement of $150 million and a maximum Tangible Net Worth Ratio of 8.0 to 1.0.
- 7A minimum liquidity requirement of $60 million has been established, and a restriction on DHI Mortgage's dividend payments has been added.
Frequently Asked Questions
The main change is that U.S. Bank National Association is now the sole buyer and administrative agent for the repurchase facility, taking over from JPMorgan Chase Bank and other previously involved buyers who have exited the agreement.
The facility is designed to provide DHI Mortgage Company, Ltd. with essential financing and liquidity by allowing it to transfer eligible loans to buyers in exchange for funds. These are essentially short-term financing transactions collateralized by loans.
Key amended covenants include maintaining a minimum Tangible Net Worth of $150 million, a maximum Tangible Net Worth Ratio of 8.0 to 1.0, and a minimum liquidity of $60 million. A new restriction on dividend payments by DHI Mortgage has also been introduced.
No, the filing explicitly states that amounts outstanding under the Repurchase Facility are not guaranteed by D.R. Horton, Inc. or any of its subsidiaries that guarantee their homebuilding debt.