DR Horton to use cash, bank line for Schuler change of control but says notes trading above put price

New York, Feb. 14 - D.R. Horton, Inc. said it would use existing cash and borrowings on its bank credit facility if holders of Schuler Homes, Inc.'s $500 million notes exercise the change-of-control put. Alternatively, Horton said it can access the capital markets at lower rates than the interest costs on the Schuler notes.

But the Arlington, Texas homebuilder pointed out in a filing with the Securities and Exchange Commission that the Schuler outstanding senior and senior subordinated notes were trading at bid prices of 102.5 to 105.5 on Feb. 1, above the change-of-control level of 101.

Excluding any notes that have to be bought back, D.R. Horton said it estimates it will need $330 million of cash to complete its pending merger with Schuler. That amount covers the cash payment that will be paid to Schuler stockholders, merger costs and the repayment of Schuler's revolving credit facility.

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