Five Point sees 99.74% participation in exchange offer for 2025 notes

By Marisa Wong

Los Angeles, Dec. 28 – Five Point Holdings LLC announced the early participation results of Five Point Operating Co., LP and Five Point Capital Corp.’s Dec. 11 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 and the concurrent consent solicitation.

As of 5 p.m. ET on Dec. 22, the early participation deadline, holders had tendered $623,389,000, or 99.74%, of the $625 million outstanding 2025 notes, according to a press release late Friday.

Given those early tenders, the issuers received consents from holders representing more than 50% of the aggregate principal amount of the existing notes, enough to effect the proposed amendments to the indenture governing the 2025 notes. The issuers have executed a supplemental indenture, which will become operative only upon completion of the exchange offer.

The exchange offer’s minimum exchange condition – receipt of tenders from holders of at least 80% of the aggregate amount outstanding – has been met as of the early participation deadline.

Tenders may no longer be withdrawn as of the early participation deadline.

The exchange offer and consent solicitation will expire at 5 p.m. ET on Jan. 10.

Settlement is still slated for Jan. 16.

If no additional tenders are submitted after the early deadline and all of the early tendered notes are accepted, the outstanding principal amount under the series will be $1,611,000, the company noted.

Exchange offer details

Five Point is offering, per $1,000 principal amount of existing notes tendered by the early participation deadline, a total consideration of $1,000, a portion of which will be payable in cash and the remainder in principal amount of new notes.

The total consideration includes an early participation premium of $50 principal amount of new notes. The early exchange consideration of $950 consists of (i) an amount of cash equal to $100 million divided by the aggregate amount of existing notes tendered on or prior to the early participation deadline, multiplied by $1,000 plus (ii) an amount of new notes equal to to $950 less the cash consideration amount.

In other words, the $100 million of cash will paid on a pro rata basis to holders who tender their notes in the exchange offer.

Assuming the $623,389,000 of early tendered notes are accepted for purchase, each holder will receive for each $1,000 principal amount, roughly $160 in cash and about $840 principal amount of new notes.

Holders who tender their notes for exchange after the early deadline are being offered $950 principal amount of new notes and no cash per $1,000 principal amount of existing notes.

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 excluding Nov. 15, 2025 and par 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.

Consent bid details

As previously reported, the proposed amendments provide for elimination of substantially all of the restrictive covenants and events of default and related provisions with respect to the existing notes.

Holders tendering their existing notes in the exchange offer must also deliver their consents to the proposed amendments, and holders delivering their consents with respect to the solicitation must also tender their notes in the exchange offer.

At the start of the offer, the company said that holders representing a majority in principal amount of the existing notes had entered into a support agreement under which they agreed to participate in the exchange offer and consent solicitation. So, the company expected to receive the necessary consents to adopt the amendments.

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.”

D.F. King & Co., Inc. (800 578-5378, 212 269-5550 or 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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