Toll Brothers plans new debt and revolver draw for acquisition

By Sara Rosenberg

New York, Nov. 7 - Toll Brothers Inc. plans on getting new long-term senior unsecured debt financing and borrowing on its existing credit facility to help fund its acquisition of the home building business of Shapell Industries Inc., according to a 424B5 filed with the Securities and Exchange Commission on Thursday.

As a back-up for the new debt, the company has received a commitment for a $500 million 364-day senior unsecured revolver that is expected to have a pricing grid ranging from Libor plus 125 basis points to 225 bps.

The company does not expect to borrow under the 364-day credit facility if it is able to raise sufficient proceeds in connection with the new long term debt financings, the filing said.

Under the acquisition agreement, Toll Brothers is buying the home building business for about $1.6 billion in cash.

Other funds for the transaction will come from new equity that is expected to represent 10% to 15% of the purchase price.

Closing is expected in the first calendar quarter of fiscal year 2014, subject to customary conditions and regulatory approvals.

Toll Brothers is a Horsham, Pa.-based builder of luxury homes.

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