8-KMaterial AgreementsFinancial EventsExhibits & Filings

HORTON D R INC /DE/ 8-K Report, Material Agreement (Mar 5, 2014)

Filed March 5, 2014For Securities:DHI

Summary

This 8-K filing by D.R. Horton, Inc. (DHI) reports a material amendment to its repurchase facility through its subsidiary, DHI Mortgage Company, Ltd. The Second Amendment to the Amended and Restated Master Repurchase Agreement, effective February 28, 2014, with U.S. Bank National Association as the administrative and syndication agent, primarily serves to enhance the company's liquidity and financing capabilities for its mortgage operations. Key changes include an increase in the maximum aggregate commitment of the repurchase facility from $300 million to $325 million, available during specific periods of fiscal quarters. Additionally, the amendment improves the pricing terms by reducing the LIBOR Margin and removing the Pricing Rate floor, which is expected to reduce borrowing costs. The facility's term has also been extended through February 27, 2015, providing continued financial support for DHI Mortgage. Investors should note that amounts outstanding under this facility are not guaranteed by the parent company or its homebuilding debt guarantors.

Key Highlights

  • 1DHI Mortgage Company, Ltd. entered into a Second Amendment to its Master Repurchase Agreement (Repurchase Facility).
  • 2The maximum aggregate commitment under the Repurchase Facility has been increased from $300 million to $325 million.
  • 3The increased commitment is available on specific days within fiscal quarters, aimed at enhancing liquidity.
  • 4Pricing terms have been improved through a reduction in the LIBOR Margin and removal of the Pricing Rate floor, likely lowering borrowing costs.
  • 5The term of the Repurchase Facility has been extended to February 27, 2015, ensuring continued financing availability.
  • 6This facility provides financing for DHI Mortgage by facilitating the transfer of eligible loans against funds from buyers.
  • 7Amounts outstanding under the Repurchase Facility are not guaranteed by D.R. Horton, Inc. or its homebuilding debt guarantors.

Frequently Asked Questions

The Repurchase Facility's primary purpose is to provide financing and liquidity to DHI Mortgage Company, Ltd. by allowing it to transfer eligible loans to buyers in exchange for funds. The Second Amendment enhances this by increasing the facility's commitment amount, improving pricing, and extending its term.

The increase from $300 million to $325 million provides DHI Mortgage with greater access to funds, which is crucial for its operations in purchasing and financing eligible loans. The availability during specific periods of fiscal quarters suggests a strategic approach to managing working capital and liquidity needs.

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 homebuilding debt. This means the parent company is not directly liable for this specific debt obligation.

The reduction in the LIBOR Margin and the removal of the Pricing Rate floor are expected to lower the interest rate and overall cost of borrowing under the Repurchase Facility. This improvement in pricing can lead to increased profitability for DHI Mortgage's financing activities.