Forestar gets $440 million credit facility

By Sara Rosenberg

New York, Dec. 17 - Forestar Real Estate Group Inc. closed on a $440 million credit facility due Dec. 1, 2010, according to an 8-K filed with the Securities and Exchange Commission Monday.

KeyBanc Capital Markets acted as the arranger and bookrunner on the deal that was completed on Dec. 14, with General Electric Credit Corp. and AgFirst Farm Credit Bank the co-syndication agents.

The facility consists of a $175 million term loan and a $265 million revolver, with both tranches priced at Libor plus 400 basis points.

The term loan has call protection of 102 in year one and 101 for the following six months. After 18 months, the loan is repayable at par.

There is a $60 million accordion feature.

Proceeds are being used to repay certain borrowings from Temple-Inland Inc. prior to the company's spin-off from Temple-Inland, and for general corporate purposes.

Security is a pledge of about 250,000 acres of land, assignments of current and future leases, rents and contracts, interest in the borrower's primary operating account, equity interests in current and future material operating subsidiaries or joint venture interests, and all other wholly owned assets.

Financial covenants include a minimum interest coverage ratio, a minimum ratio of total revenues to capital expenditures, a maximum leverage ratio, a minimum liquidity requirement and a minimum tangible net worth requirement.

Forestar is an Austin, Texas-based real estate firm.

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