Beazer Homes gets needed consents for $1.53 billion of notes, convertibles

By Jennifer Chiou

New York, Oct. 29 - Beazer Homes USA, Inc. said it received the required consents to amend its $1.53 billion of senior notes and senior convertible notes.

The solicitation ended at 5 p.m. ET on Oct. 26, prolonged from Oct. 24. It began on Oct. 15.

Beazer said it has executed supplemental indentures for the proposed amendments.

Holders of $165.46 million of its 8 5/8% senior notes due May 2011, $246.96 million of its 8 3/8% senior notes due April 2012, $196.37 million of its 6½% senior notes due November 2013, $347.94 million of its 6 7/8% senior notes due July 2015, $274.17 million of its 8 1/8% senior notes due June 2016 and $178.09 million of its 4 5/8% convertible senior notes due 2024 gave consent.

For each $1,000 principal amount, the company will pay a consent fee equal to the product of $12.50, up from $5.00, multiplied by a fraction, the numerator of which is the total principal amount of notes and the denominator of which is the amount of notes for which the company has accepted consents.

For each $1,000 principal amount, the consent fee is $12.69 for the 8 5/8% notes, $15.06 for the 8 3/8% notes, $12.73 for the 6½% notes, $12.57 for the 6 7/8% notes, $12.54 for the 8 1/8% notes and $12.63 for the 4 5/8% convertibles.

The Atlanta-based single-family homebuilder solicited consents to amend the note indentures to obtain a waiver for the requirement that it file forms, including 10-Qs, with the Securities and Exchange Commission.

The company also solicited consents for an amendment to the definition of permitted liens that would restrict its ability to secure additional debt in excess of $700 million until it has four consecutive fiscal quarters with a consolidated fixed-charge coverage ratio of at least 2 to 1, after which time the limit will revert to the existing level of 40% of consolidated tangible assets.

Other amendments included changes to the definition of permitted investments that would enable the company to invest up to $50 million in joint ventures or unrestricted subsidiaries.

Previous amendments that were withdrawn included a proposed covenant that would have obligated Beazer after May 15, 2008 to file reports with the SEC and deliver them to the trustees and holders and provided for additional interest of 50 basis points per year if Beazer failed to comply with the obligations on a timely basis.

As previously disclosed, Beazer has delayed filing its 10-Q for the period ended June 30 due to an independent internal investigation by the audit committee of the company's board.

On Oct. 11, the company said that the audit committee determined that it will be necessary for the company to restate its financial statements relating to fiscal years 2004 through 2006 and the interim periods of fiscal 2006 and fiscal 2007.

The restatement is also expected to impact the financial results for fiscal years 1999 through 2003 and Beazer said it expects that it will reflect the impact of financial results for these prior years as a part of the opening balances in the financial statements for the restatement period.

Beazer previously said that it does not believe it is in default under the note indentures.

MacKenzie Partners, Inc. (800 322-2885 or call collect 212 929-5500) was the information agent and tabulation agent. Citi (800 558-3745 or call collect 212 723-6106), Wachovia Securities (866 309-6316 or call collect 704 715-8341) and RBS Greenwich Capital (877 297-9832 or call collect 203 618-6145) were the solicitation agents.

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