Ashton Woods begins private exchange offer for 9½% notes, seeks waiver

By Angela McDaniels

Tacoma, Wash., Jan. 13 - Ashton Woods USA LLC has begun a private exchange offer and consent solicitation for its $125 million 9½% senior subordinated notes due 2015, according to a company news release.

The company is offering to exchange any and all of the 9½% notes in a private placement for (a) up to $65 million of new 11% senior subordinated notes due 2015 guaranteed by Ashton Woods' restricted subsidiaries and (b) a ratable share of class B membership interests in Ashton Woods representing up to 20% of the company's outstanding membership interests.

Ashton Woods is also soliciting consents to amend the note indenture to eliminate or amend substantially all of the restrictive covenants, waive some defaults and modify some events of default and various other provisions.

Noteholders are also being asked to release and waive any and all claims they may have against Ashton Woods and its equity holders.

Ashton Woods missed the Oct. 1 interest payment on the notes. In October, the company said it could not make the payment because of a default on its senior credit facility and that the missed payment would constitute an event of default if not cured or otherwise waived within 30 days, giving the noteholders the right to accelerate the maturity of the notes.

A tender in the exchange offer will constitute an approval by that holder of the amendment and release.

The exchange offer and consent solicitation will expire at 5 p.m. ET on Feb. 11.

Holders representing 70.8% of the notes have agreed to tender their notes into the offer, according to the release.

In addition, some of Ashton Woods' equity holders have agreed to invest $20 million of equity simultaneously with the closing of the exchange offer, and the company has negotiated amendments to its senior credit facility that will cure existing defaults and provide the company with a $95 million replacement line of credit. Consummation of the amendment is conditioned upon closing of the exchange offer.

In August, the company said the default on the credit facility stemmed from its failure to comply with the tangible net worth, leverage ratio and land inventory ratio covenants.

The exchange offer and consent solicitation are being made only to qualified institutional buyers, accredited investors and non-U.S. persons as defined under Securities Act of 1933.

Ashton Woods is an Atlanta-based private homebuilder.

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