Tri Pointe to draw on revolver to finance buyout of Weyerhaeuser unit

By Angela McDaniels

Tacoma, Wash., Jan. 9 - Tri Pointe Homes, Inc. plans to draw on its $175 million revolving credit facility in connection with its upcoming acquisition of Weyerhaeuser Real Estate Co., according to an S-4 filing with the Securities and Exchange Commission.

Tri Pointe agreed to acquire Weyerhaeuser Real Estate from Federal Way, Wash.-based Weyerhaeuser Co. in a $2.7 billion deal expected to close in the second quarter.

Other funding will come from $800 million of debt securities that Weyerhaeuser Real Estate plans to issue.

If the amount of debt securities that Weyerhaeuser Real Estate sells is less than $800 million, it will obtain a one-year senior bridge loan in an amount equal to $800 million minus the amount of debt securities issued.

Deutsche Bank AG, Cayman Islands Branch and Citigroup Global Markets Inc. agreed to provide the bridge loan.

The bridge loan would have a Libor floor of 1%, and the margin over Libor would increase by 50 basis points every three months up to a cap.

If the company fails to raise permanent financing before the bridge loan's maturity, it would be converted to a seven-year senior term loan.

At any time after conversion, the term loans could be exchanged at the option of the lenders for eight-year senior exchange notes.

The notes would have a make-whole call option at Treasuries plus 50 bps for the first four years. After four years, they would be callable at par plus a premium that would initially equal half of the coupon and then decline every year, reaching zero two years prior to maturity. They would also have an equity clawback option for up to 35% of the notes for the first three years.

On up to three occasions, Citigroup or Deutsche Bank could deliver a demand requiring Weyerhaeuser Real Estate to issue debt securities to provide proceeds at least equal to the bridge loan commitments or an amount sufficient to repay all or any portion of the amount outstanding under the bridge loan or term loan, as applicable.

Tri Pointe is a homebuilder based in Irvine, Calif.

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