AUSTIN, Texas--(BUSINESS WIRE)--Oct. 12, 2017--
Forestar Group Inc. (“Forestar”) today announced that it has delivered a
notice to holders of its 3.75% Convertible Senior Notes due 2020 (the
“Notes”), pursuant to the indenture governing the Notes (as
supplemented, the “Indenture”), notifying holders that, as a result of
the merger (the “Merger”) pursuant to the Agreement and Plan of Merger,
dated as of June 29, 2017, among D.R. Horton Inc. (“D.R. Horton”), Force
Merger Sub, Inc. and Forestar, a “Fundamental Change” and a “Make-Whole
Fundamental Change,” each as defined in the Indenture, occurred
effective as of October 5, 2017.
As a result of the Fundamental Change, holders of the Notes have the
right to convert their Notes, at any time until November 9, 2017,
subject to the terms and conditions of the Indenture. The Notes are
convertible into cash and shares of common stock of the surviving entity
in the Merger (such common stock, “Post-Merger Forestar Common Stock”)
based on the weighted average of cash and shares of Post-Merger Forestar
Common Stock received by the holders of Forestar common stock that
affirmatively made an election in connection with the Merger. As a
result of elections made in connection with the Merger, the per-share
weighted average consideration attributable to one share of Forestar
common stock consists of $14.19785 in cash and 0.20012 shares of
Post-Merger Forestar Common Stock (such per-share weighted average, a
“Unit of Reference Property”). Accordingly, holders of the Notes have
the right to convert their Notes, subject to the terms and conditions of
the Indenture, into $579.77062 in cash and 8.17192 shares of Post-Merger
Forestar Common Stock per $1,000 aggregate principal amount of Notes
(the “Reference Property”).
The completion of the Merger also constitutes a “Make-Whole Fundamental
Change” under the Indenture. However, pursuant to the terms and
conditions of the Indenture, there will be no increase of the conversion
rate in connection with this Make-Whole Fundamental Change.
Under the terms of the Indenture, Forestar has the option to settle any
conversions in the form of Units of Reference Property, cash or a
combination of cash and Units of Reference Property.
In connection with the completion of the Merger, on October 5, 2017,
Forestar entered into a supplemental indenture with U.S. Bank National
Association, as trustee (the “Trustee”), pursuant to which, among other
things, for each share of Forestar common stock holders of the Notes
were previously entitled to receive upon conversion of their Notes, such
holders will instead be entitled to receive a Unit of Reference Property.
In addition, in connection with the completion of the Merger and
pursuant to the terms of the Indenture, Forestar is commencing an offer
to repurchase, at the option of each holder of Notes, any and all of the
Notes. A disclosure document detailing the repurchase option and the
conversion right (such disclosure document, the “Offer to Repurchase”)
is being sent by the Trustee on behalf of Forestar to DTC as sole record
owner of the Notes. Pursuant to the terms of the Offer to Repurchase and
the Indenture, each holder of Notes has the right, subject to certain
conditions, at such holder’s option, to require Forestar to repurchase
for cash all of such holder’s Notes, or any portion thereof that equals
$1,000 or an integral multiple of $1,000 in excess thereof, on November
13, 2017 (the “Fundamental Change Repurchase Date”). This repurchase
right is separate from the right of holders of Notes to convert their
Notes as described above. Forestar will purchase such Notes at a
repurchase price equal to 100% of the principal amount of the Notes to
be repurchased, plus accrued and unpaid interest thereon to, but
excluding, the Fundamental Change Repurchase Date. Tenders of the Notes
must be made prior to 5:00 p.m., New York City time, on November 9,
2017, and may be withdrawn at any time prior to 5:00 p.m., New York City
time, on that same day.
The Trustee has informed Forestar that, as of October 12, 2017, all
Notes are held through The Depository Trust Company (“DTC”) and that
there are no certificated Notes in non-global form. Accordingly, all
Notes surrendered for repurchase or conversion must be delivered through
the rules and procedures of DTC. U.S. Bank National Association, Attn:
Corporate Actions, 111 Fillmore Avenue, St. Paul, MN 55107-1402, is the
paying agent and conversion agent.
None of Forestar and D.R. Horton or any of their respective affiliates,
their respective boards of directors, employees, advisors or
representatives or the Trustee are making any representation or
recommendation to any holder as to whether or not to tender or refrain
from tendering their Notes in the offer to repurchase Notes, or to
exercise their conversion right (if at all).
THIS PRESS RELEASE IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT
CONSTITUTE AN OFFER TO BUY OR THE SOLICITATION OF AN OFFER TO SELL THE
NOTES. THE OFFER TO REPURCHASE NOTES IS BEING MADE ONLY PURSUANT TO A
TENDER OFFER STATEMENT ON SCHEDULE TO (INCLUDING THE OFFER TO REPURCHASE
AND RELATED MATERIALS) THAT FORESTAR IS FILING WITH THE SECURITIES AND
EXCHANGE COMMISSION (THE “SEC”) AND THEREAFTER DISTRIBUTING TO ITS
NOTEHOLDERS. NOTEHOLDERS AND INVESTORS SHOULD READ CAREFULLY THE TENDER
OFFER STATEMENT WHEN IT BECOMES AVAILABLE BECAUSE IT CONTAINS IMPORTANT
INFORMATION, INCLUDING THE VARIOUS TERMS OF, AND CONDITIONS TO, THE
OFFER TO REPURCHASE NOTES. AFTER FORESTAR FILES THE TENDER OFFER
STATEMENT WITH THE SEC, NOTEHOLDERS AND INVESTORS MAY OBTAIN A FREE COPY
OF THE TENDER OFFER STATEMENT AND OTHER DOCUMENTS THAT FORESTAR FILES
WITH THE SEC AT THE WEBSITE MAINTAINED BY THE SEC AT WWW.SEC.GOV
OR BY CONTACTING FORESTAR AT (512) 433-5200. NOTEHOLDERS ARE URGED TO
CAREFULLY READ THESE MATERIALS PRIOR TO MAKING ANY DECISION WITH RESPECT
TO THE OFFER TO REPURCHASE.
About Forestar Group Inc.
Forestar Group Inc. is a residential and real estate development company
with operations in 14 markets in 10 states, where it owns, directly or
through joint ventures, interests in 48 residential and mixed-use
projects. As of October 5, 2017, Forestar is a majority-owned subsidiary
of D.R. Horton, Inc., the largest homebuilder by volume in the United
States for fifteen consecutive years.
Portions of this document may constitute “forward-looking statements” as
defined by the Private Securities Litigation Reform Act of 1995.
Although Forestar believes any such statements are based on reasonable
assumptions, there is no assurance that actual outcomes will not be
materially different. All forward-looking statements are based upon
information available to Forestar on the date this document was issued.
Forestar does not undertake any obligation to publicly update or revise
any forward-looking statements, whether as a result of new information,
future events or otherwise. Some forward-looking statements discuss
Forestar’s plans, strategies and intentions. They use words such as
“expects,” “may,” “will,” “believes,” “should,” “would,” “could,”
“approximately,” “anticipates,” “estimates,” “targets,” “intends,”
“likely,” “projects,” “positioned,” “strategy,” “future,” and “plans.”
In addition, these words may use the positive or negative or other
variations of those terms. Forward-looking statements also include all
other statements in this press release that are not historical facts.
Certain of the factors that may cause the actual results to be
materially different from the future results expressed by the
forward-looking statements are contained in Forestar’s annual report on
Form 10-K and its most recent quarterly report on Form 10-Q, both of
which are filed with the SEC.
View source version on businesswire.com: http://www.businesswire.com/news/home/20171012006392/en/
Source: Forestar Group Inc.
Forestar Group Inc.
Charles D. Jehl, 512-433-5229