8-KOther Events

ESSEX PROPERTY TRUST, INC. 8-K Report, Corporate Update (Mar 18, 2014)

Filed March 18, 2014For Securities:ESS

Summary

This Form 8-K filing by Essex Property Trust, Inc. (ESS) provides an update on the financing for its merger with BRE Properties, Inc. (BRE). The company has terminated a previously disclosed $1 billion bridge loan commitment and has secured a new $500 million senior unsecured term loan facility from a group of lenders including Citigroup Global Markets Inc., Wells Fargo Bank, N.A., Union Bank, N.A., and U.S. Bank National Association. This term loan facility is subject to customary closing conditions and is intended to fund a portion of the cash consideration for the merger, related fees and expenses, and potentially repay certain BRE indebtedness. In connection with obtaining BRE's consent for this financing change, Essex has agreed to retain at least $425 million in borrowing availability under its revolving credit facility and $75 million in cash from its at-the-market program. This combined $1 billion in available resources matches the amount previously available under the terminated bridge loan commitment. Investors should note that the merger is not conditioned on Essex securing financing, and the company retains the flexibility to pursue alternative financing. The filing also reiterates the importance of the definitive joint proxy statement/prospectus for detailed information on the merger.

Key Highlights

  • 1Essex Property Trust (ESS) has terminated a $1 billion bridge loan commitment for its merger with BRE Properties (BRE).
  • 2A new $500 million senior unsecured term loan facility has been secured from a syndicate of lenders, including Citigroup, Wells Fargo, Union Bank, and U.S. Bank.
  • 3The proceeds from the term loan facility are intended to fund merger-related cash consideration, fees, expenses, and/or repayment of BRE's debt.
  • 4Essex has agreed to retain $425 million in revolving credit availability and $75 million in cash from equity sales to ensure $1 billion in readily available funds, matching the prior bridge loan commitment amount.
  • 5The merger is not contingent on Essex securing financing.
  • 6The term loan facility matures one year after closing with a one-year extension option, subject to conditions and fees.
  • 7The company retains the right to pursue alternative financing for the merger.

Frequently Asked Questions

This 8-K filing serves to update investors on the financing arrangements for the merger between Essex Property Trust (ESS) and BRE Properties (BRE). Specifically, it announces the termination of a previously disclosed bridge loan commitment and the establishment of a new term loan facility.

While the type of facility has changed from a $1 billion bridge loan to a $500 million term loan, Essex has committed to retaining $425 million in revolving credit availability and $75 million in cash from its at-the-market program. This ensures a total of $1 billion in available resources, matching the amount previously represented by the bridge loan commitment.

Yes, the $500 million term loan facility is subject to several conditions, which are similar to those for the terminated bridge loan commitment. These include the consummation of the merger under the merger agreement, the absence of defaults, the absence of material adverse effects for either company, delivery of financial statements and closing documents, and accuracy of representations and warranties.

No, Essex, along with its subsidiaries Essex LP and Merger Sub, retains the right to use alternative financing for the merger and is not obligated to draw upon the commitment for the Term Loan Facility.