Landsea Homes Announces Commencement of Private Offering of Senior Notes
Landsea Homes (LSEA) plans to offer $300 million senior notes due 2029 to pay down outstanding borrowings under its revolving credit facility. The Notes will be guaranteed by material wholly owned subsidiaries, targeting qualified institutional buyers and non-U.S. persons.
The announcement by Landsea Homes Corporation regarding its intention to offer $300 million in senior notes is a strategic financial move aimed at optimizing the company's capital structure. By choosing to pay down its revolving credit facility, the company is likely attempting to reduce its interest expense and improve financial flexibility. It's important to note that the decision to issue debt can be influenced by various factors, including current interest rates, the company's leverage ratio and investor appetite for corporate bonds.
Investors should consider the impact of the new issuance on the company's debt-to-equity ratio and overall leverage. Additionally, the guarantee by the company's material wholly owned subsidiaries suggests a strong backing for the notes, potentially making them more attractive to institutional investors. However, the unregistered nature of the notes limits their marketability to qualified institutional buyers and non-U.S. persons, which could affect the liquidity and pricing of the notes in the secondary market.
Landsea Homes Corporation's move to issue senior notes is indicative of broader market trends where corporations leverage debt markets to refinance existing obligations. This is often seen as a positive sign when companies can secure capital at lower costs, reflecting investor confidence in the company's long-term prospects. However, the real estate sector is sensitive to interest rate changes and the timing of such an offering could be impacted by market conditions and investor sentiment towards the industry.
It is also worth noting that the exclusivity of the offering to qualified institutional buyers and non-U.S. persons, as per Rule 144A and Regulation S, is a common practice for unregistered securities. This could suggest that Landsea Homes is targeting a specific investor base that is comfortable with the risk profile and return expectations of such notes.
From a legal standpoint, the issuance of senior notes by Landsea Homes must comply with the Securities Act of 1933. The company's choice to offer these notes under Rule 144A and Regulation S means they are bypassing the public registration process, which can be both time-consuming and costly. This strategy allows for a quicker capital raise but restricts the investor pool to those who meet specific qualifications, which is a trade-off the company appears willing to make.
Investors should be aware that these notes will not have the same regulatory protections as registered securities, which could entail a higher risk. The legal framework surrounding private placements is complex and the company must ensure that all disclosures and procedures are meticulously followed to prevent any potential legal issues that could arise from non-compliance.
03/18/2024 - 08:38 AM
DALLAS, March 18, 2024 (GLOBE NEWSWIRE) -- Landsea Homes Corporation (Nasdaq: LSEA) (“Landsea Homes” or the “Company”) announced today that it intends to offer $300,000,000 aggregate principal amount of senior notes due 2029 (the “Notes”), subject to market conditions and other factors. The Notes will be guaranteed, jointly and severally, on a senior unsecured basis, by all of the Company’s material wholly owned subsidiaries as of their issuance (the “Guarantors”) and will rank pari passu with all other unsecured and unsubordinated indebtedness of the Company and Guarantors.
The Company intends to use the net proceeds from the sale of the Notes to pay down a portion of the outstanding borrowings under its revolving credit facility.
The Notes will be offered only to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to non-U.S. persons outside the United States under Regulation S under the Securities Act. The Notes have not been registered under the Securities Act, and may not be offered or sold in the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and other applicable securities laws.
This press release is neither an offer to sell nor a solicitation of an offer to buy the Notes, nor shall there be any sale of the Notes in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. An offer, or solicitation to buy, the Notes, if at all, will be made only by means of a confidential offering memorandum.
About Landsea Homes Corporation
Landsea Homes Corporation (Nasdaq: LSEA) is a publicly traded residential homebuilder based in Dallas, Texas, that designs and builds best-in-class homes and sustainable master-planned communities in some of the nation’s most desirable markets. The company has developed homes and communities in New York, Boston, New Jersey, Arizona, Colorado, Florida, Texas, and throughout California in Silicon Valley, Los Angeles, and Orange County.
Forward-Looking Statements
Certain statements in this press release may constitute “forward-looking statements” within the meaning of the federal securities laws. These statements constitute projections, forecasts, and forward-looking statements, and are not guarantees of performance. Landsea Homes cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Words such as “may,” “can,” “should,” “will,” “estimate,” “plan,” “project,” forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target,” “look” or similar expressions may identify forward-looking statements.
These forward-looking statements are based on information available as of the date of this press release and our management’s current expectations, forecasts, and assumptions, and involve a number of judgments, risks and uncertainties that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements.
These risks and uncertainties include, but are not limited to, the risk factors described by Landsea Homes in its filings with the SEC. Accordingly, forward-looking statements should not be relied upon as representing our views as of any subsequent date, and you should not place undue reliance on these forward-looking statements in deciding whether to invest in our securities. We do not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
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What is Landsea Homes (LSEA) planning to offer?
Landsea Homes (LSEA) intends to offer $300 million aggregate principal amount of senior notes due 2029.
How will Landsea Homes (LSEA) use the proceeds from the sale of the Notes?
Landsea Homes (LSEA) plans to use the net proceeds from the sale of the Notes to pay down a portion of the outstanding borrowings under its revolving credit facility.
Who will guarantee the Notes offered by Landsea Homes (LSEA)?
The Notes will be guaranteed, jointly and severally, on a senior unsecured basis, by all of the Company’s material wholly owned subsidiaries.
To whom will the Notes be offered by Landsea Homes (LSEA)?
The Notes will be offered only to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, and to non-U.S. persons outside the United States under Regulation S.
Are the Notes offered by Landsea Homes (LSEA) registered under the Securities Act?
The Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption.
