Landsea Homes Announces Pricing of Private Offering of Senior Notes
Landsea Homes (LSEA) priced its offering of $300,000,000 of 8.875% Senior Notes due 2029, with settlement expected around April 1, 2024. The net proceeds will be used to pay down outstanding borrowings under its revolving credit facility. The Notes are offered to qualified institutional buyers and non-U.S. persons under specific regulations.
The pricing of Landsea Homes Corporation's $300 million Senior Notes at an 8.875% yield is indicative of the current credit market conditions and investor appetite for corporate debt. This yield is relatively high compared to historical averages, suggesting a premium is being paid by the company possibly due to perceived risk, market volatility, or increased interest rates.
An analysis of the debt's structure, being senior and unsecured, means that these notes will take precedence over other potential unsecured debt obligations in the event of a default, but they are not backed by specific collateral. This positioning affects the risk profile of the Notes, making them more attractive to certain institutional investors who prioritize claim seniority.
Furthermore, the use of proceeds to pay down existing debt under a revolving credit facility is a strategic move to manage the company's capital structure and liquidity. This could indicate an attempt by Landsea Homes to improve financial metrics such as leverage ratios or interest coverage, which are critical factors for credit rating agencies and investors alike.
Landsea Homes Corporation's decision to issue debt could be a response to the housing market's dynamics. If the housing market is expected to experience growth, the company may be positioning itself to capitalize on this by ensuring they have the necessary capital to fund operations and potential expansions.
However, if the market is in a downturn, the company might be seeking to strengthen its balance sheet against potential headwinds. The timing of the offering and the choice of debt over equity financing are critical elements that reflect the company's strategy and market conditions.
It is also relevant to consider the investor base for these Senior Notes. As they are offered to qualified institutional buyers and non-U.S. persons, it reflects a targeted approach to fundraising, potentially due to the regulatory and risk profile preferences of these investors.
The offering's compliance with Rule 144A and Regulation S is a legal maneuver that allows Landsea Homes to access capital from institutional investors without the need for a public offering. This approach is often quicker and less costly in terms of regulatory compliance compared to a public issuance. However, it limits the pool of potential investors to those who meet certain criteria, which could affect the liquidity and marketability of the Notes.
The legal stipulations that the Notes have not been registered under the Securities Act and are subject to certain exemptions highlight the regulatory landscape that companies must navigate when raising capital. The absence of registration necessitates a reliance on exemptions, which could impose restrictions on the resale of the Notes, potentially impacting their attractiveness to investors who prioritize liquidity.
03/19/2024 - 04:05 PM
DALLAS, March 19, 2024 (GLOBE NEWSWIRE) -- Landsea Homes Corporation (Nasdaq: LSEA ) (“Landsea Homes” or the “Company”) announced today that it has priced its previously announced offering (the “Offering”) of $300,000,000 of 8.875% Senior Notes due 2029 (the “Notes”). 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 Offering is expected to settle on or around April 1, 2024, subject to customary closing conditions.
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 are being 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.
Media Contact :
Investor Relations Contact: drew@mackintoshir.com
What is the ticker symbol of Landsea Homes ?
The ticker symbol for Landsea Homes is LSEA.
What is the offering amount of the Senior Notes by Landsea Homes ?
Landsea Homes is offering $300,000,000 of 8.875% Senior Notes due 2029.
When is the settlement of the offering expected to take place?
The settlement of the offering is expected to occur around April 1, 2024.
Who are the intended buyers for the Notes offered by Landsea Homes ?
The Notes are offered to qualified institutional buyers and non-U.S. persons under specific regulations.
How does Landsea Homes plan to utilize the net proceeds from the Notes sale?
Landsea Homes intends to use the net proceeds to pay down a portion of the outstanding borrowings under its revolving credit facility.
