Five Point offers to exchange 7 7/8% notes due 2025 for 2028 notes, cash

By Wendy Van Sickle

Columbus, Ohio, Dec. 11 – Five Point Holdings LLC said Five Point Operating Co., LP and Five Point Capital Corp. began an offer to exchange their 7 7/8% senior notes due Nov. 15, 2025 (Cusips: 33834YAA6, U33825AA5) for 10½% initial-rate senior notes due Jan. 15, 2028 and cash, as well as a concurrent solicitation of consents from holders of the notes, according to a news release.

The new notes will have two coupon step-ups. From Nov. 15, 2025 through Nov. 14, 2026, the interest rate payable on the new notes will be increased to 11%. From Nov. 15, 2026 through the maturity date, the rate will be increased to 12%.

The issuers will be entitled, on one or more occasions, to redeem all or a part of the new notes at a redemption price equal to 104 on or prior to Nov. 14, 2024, 102 from and including Nov. 15, 2024 to, but not including, Nov. 15, 2025, and 100 from and including Nov. 15, 2025 to the maturity date, plus, in each case, accrued interest.

The indenture governing the new notes will contain covenants that are consistent with the indenture governing the existing notes except the indenture governing the new notes will, among other things, further limit the issuers’ ability and the ability of its restricted subsidiaries to pay dividends, redeem or repurchase the issuers’ capital stock or redeem the existing notes prior to June 1, 2025, subject to exceptions.

The company is offering an early exchange consideration, per $1,000 principal amount of existing notes, to holders who tender their notes for exchange by 5 p.m. ET on Dec. 22 of $790 principal amount of new notes and $840 principal amount of new notes, which includes an early participation premium of $50 principal amount of new notes, the company said.

Holders who tender their notes for exchange after the early deadline, but before the final deadline, 5 p.m. ET on Jan. 10, are being offered $950 principal amount of new notes and no cash per $1,000 principal amount of existing notes.

Under the consent solicitation, the company is proposing amendments including the elimination of substantially all of the restrictive covenants and events of default and related provisions with respect to the existing notes. Eligible holders tendering their existing notes in the exchange offer must also deliver their consent to the proposed amendments and holders delivering their consents with respect to the solicitation must also tender their notes in the exchange offer.

The company said that holders representing a majority in principal amount of the existing notes have entered into a support agreement under which they have agreed to participate in the exchange offer and consent solicitation, which means Five Point expects to have the necessary consents to adopt the amendments. The company said additional holders of the notes have expressed their intention to participate in the offer and solicitation, but those indications are not binding.

Settlement is expected to occur on Jan. 16.

The $625 million of outstanding existing notes were issued in November 2017.

The exchange offer is being made only to “qualified institutional buyers” in the United States under Rule 144A or non-U.S. persons outside of the United States under Regulation S. The exchange offer is being made in Canada on a private placement basis to holders of existing notes who are “accredited investors” and “permitted clients.”

The deadline to withdraw exchange instructions is 5 p.m. ET on Dec. 22.

D.F. King & Co., Inc. (800 578-5378 (toll free), 212 269-5550 or at fivepoint@dfking.com) is the information agent and exchange agent.

Five Point is an Aliso Viejo, Calif.-based planner and developer of mixed-use, master-planned communities.

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