By Lisa Kerner
Charlotte, N.C., April 17 - Affordable Residential Communities Inc. entered into a definitive agreement to sell its manufactured home community business to an affiliate of Farallon Capital Management, LLC for an estimated $9.35 to $9.40 per common share.
The gross proceeds to ARC will be $1.794 billion consisting of cash and assumed debt, according to a form 8-K filing with the Securities and Exchange Commission.
Affordable Residential expects to use a large portion of its existing net operating losses in the transaction. In addition, the company will retain about $125.0 million of series A preferred stock, $96.6 million of senior exchangeable notes due 2025 and $25.8 million of trust preferred securities due 2035, as well as ownership of the recently acquired NLASCO insurance operations. It will look to make opportunistic acquisitions with the proceeds.
The transaction is expected to be completed by the end of 2007, subject to stockholder approval and other customary closing conditions.
A termination fee of $20 million, plus expenses, is included in the agreement. Under certain specified circumstances, the termination fee will be either $37.5 million or $50 million.
Farallon has agreed to offer positions to all Affordable Residential Communities employees working for the manufactured home community business.
"We are very pleased to have reached an agreement with Farallon and we are confident that Farallon's financial resources and real estate expertise will provide a compelling opportunity for our employees and customers," American Residential chairman and chief executive officer Larry Willard said in a news release included in the SEC filing.
"We look forward to the opportunity to reposition the company."
Sandler O'Neill + Partners, L.P. has delivered a fairness opinion in connection with the transaction, while Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal advisor to American Residential.
Affordable Residential, based in Englewood, Colo., operates manufactured home communities.
| Acquirer: | Farallon Capital affiliate
|
| Target: | Affordable Residential Communities Inc. manufactured home community business
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| Transaction total: | $1.84 billion
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| Price per share: | $9.35 to $9.40
|
| Termination fee: | $20 million to $50 million
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| Announcement date: | April 17
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| Expected closing: | The end of 2007
|
| Stock price for target: | NYSE: ARC: $12.40 on April 16
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