KB HOME: Entering into a Material Definitive Agreement, Creating a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant (Form 8-K)

Section 1.01 Entering into a Material Definitive Agreement.

On August 25, 2022, Knowledge base home (“Company”) has entered into a senior unsecured term loan (“Term Loan”) with the party lenders thereto (“Lenders”), pursuant to which the Lenders have agreed to lend to the Company until $310,000,000. The Company did not draw on the term loan at closing and may draw up to this amount at any time by November 23, 2022, subject to the conditions of use. In certain circumstances, the total commitment under the term loan may be increased up to $400,000,000as long as the additional commitments of the lenders that the Company pursues are obtained. Wells Fargo Bank, National Association acts as administrative agent for the term loan and is a lender.

The Company maintains banking relationships in the normal course of business with Wells Fargo Bank, National Association; Wells Fargo Securities, LLCwho acts as lead manager and sole bookrunner for the term loan; West Bank, Fifth Third BankNational Association and National Association of American Banks, each of whom acts as documentation officers; and with some of the other lenders. In addition, subject to the payment of customary fees and reimbursements of expenses, the Company has undertaken and may undertake in the future Wells Fargo Bank, National Association, Wells Fargo Securities, LLC, West Bank,
Fifth Third BankNational Association, National Association of American Banks and certain of the other lenders and their respective affiliates to provide commercial banking, investment banking, underwriting and advisory services for and/or effect transactions with the Company. Bank of Regionsa lender, is a trustee under the Company’s senior note indenture.

The term loan will mature on August 25, 2026 or sooner, if the Company guarantees the loans under its unsecured revolving credit facility without similarly guaranteeing the term loan (subject to certain exceptions).

The term loan contains various covenants, including financial covenants relating to tangible net worth, leverage, cash or interest coverage and borrowing base, and a limitation on investments in joint ventures and non-guaranteeing subsidiaries. In addition, the term loan contains customary events of default, subject to recovery periods in certain circumstances, which would result in the termination of the covenant and allow the lenders to accelerate payment of outstanding amounts, including non- payment of principal, interest and fees or other amounts; breach of covenants; inaccuracy of representations and warranties; cross default of certain other debts; unpaid judgments; and certain bankruptcies and other insolvencies. In the event of a Change of Control (as defined in the Term Loan), the Lenders may terminate the Commitment and require the Company to repay amounts outstanding under the Term Loan. Interest rates will generally be based either on an adjusted forward SOFR rate or on a base rate, plus a spread ranging from 1.35% to 1.90% and from 0.35% to 0.90%, respectively, according to the Company’s debt ratio.

Proceeds drawn under the term loan are to be guaranteed by certain of the Company’s subsidiaries and are intended to be used to redeem, purchase or redeem the Company’s 7.625% Senior Notes due May 15, 2023which may be called par, plus accrued and unpaid interest thereon, six months prior to such date, pay all fees and expenses incurred in connection with the Term Loan and such redemption, purchase or payment, and for working capital and other general business expenses.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under a

Off-balance sheet arrangement of a registrant.

(a) The information set out above in Section 1.01 is incorporated by reference into this Section 2.03.

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