8-KMaterial AgreementsFinancial EventsExhibits & Filings

HORTON D R INC /DE/ 8-K Report, Material Agreement (Mar 2, 2016)

Filed March 2, 2016For Securities:DHI

Summary

D.R. Horton, Inc. (DHI) has filed an 8-K report detailing a significant amendment to its Master Repurchase Agreement through its subsidiary, DHI Mortgage Company, Ltd. The First Amendment to the Second Amended and Restated Master Repurchase Agreement, effective February 26, 2016, primarily concerns the financing and liquidity provided to DHI Mortgage by U.S. Bank National Association and other buyers. This amendment is crucial for investors as it modifies the financial structure and operational terms under which DHI Mortgage can secure funding for its loan portfolio. The key impact for investors is the increase in the financing capacity of the repurchase facility, along with adjustments to interest rates and liquidity requirements. The enhanced borrowing limit, particularly the accordion feature, provides DHI Mortgage with greater flexibility to manage its cash flow and operational needs, especially during periods of high activity or market fluctuations. While the amendment introduces some stricter net worth requirements, the overall expansion of credit availability signals continued support for the subsidiary's operations and potentially its growth strategy.

Key Highlights

  • 1DHI Mortgage Company, Ltd. entered into a First Amendment to its Master Repurchase Agreement, extending and modifying its financing facility.
  • 2The maximum aggregate commitment amount under the repurchase facility has been increased to $475 million, with an accordion feature potentially raising it to $650 million.
  • 3A temporary increase to $550 million is available during the last five days of any fiscal quarter and the first twenty-five days of the following quarter, enhancing short-term liquidity.
  • 4The effective interest rate paid by DHI Mortgage has been reduced by one-eighth of one percent (1/8%).
  • 5The required Seller's Liquidity has been reduced by $10,000,000, while the required Seller's Consolidated Tangible Net Worth has been increased by $25,000,000.
  • 6The term of the Amended Repurchase Facility has been extended, with an expiration date of February 24, 2017, unless terminated earlier.
  • 7Amounts outstanding under the facility are not guaranteed by the parent company, D.R. Horton, Inc., or its homebuilding debt guarantors.

Frequently Asked Questions

The main purpose of this filing is to report a material definitive agreement, specifically the First Amendment to the Second Amended and Restated Master Repurchase Agreement, which impacts the financing and liquidity available to DHI Mortgage Company, Ltd., a subsidiary of D.R. Horton, Inc.

The amendment significantly increases the borrowing capacity. The maximum aggregate commitment has been raised to $475 million, with an additional 'accordion' feature that could allow it to reach $650 million. There's also a short-term increase to $550 million available at specific times of the quarter to manage liquidity needs.

Yes, the effective interest rate for DHI Mortgage has been reduced by 1/8%. Additionally, while the required Seller's Liquidity was reduced by $10 million, the required Seller's Consolidated Tangible Net Worth was increased by $25 million, indicating a shift in financial requirements.

The Amended Repurchase Facility is now set to expire on February 24, 2017, unless terminated earlier under specific conditions outlined in the agreement.