AV Homes Convertible Notes
In connection with the consummation of the Merger, AV Homes, as an indirect subsidiary of the Company, and Wilmington Trust, National Association (as successor by merger to Wilmington Trust FSB) (the “AV Homes Convertible Notes Trustee”), entered into a Seventh Supplemental Indenture (the “Seventh Supplemental Indenture”), dated as of October 2, 2018, which supplements the Indenture, dated as of February 4, 2011 (the “Base Indenture”), by and between AV Homes and the AV Homes Convertible Notes Trustee, as supplemented by (i) the First Supplemental Indenture, dated as of February 4, 2011, between AV Homes and the AV Homes Convertible Notes Trustee, (ii) the Second Supplemental Indenture, dated as of July 25, 2012, between AV Homes and the AV Homes Convertible Notes Trustee, (iii) the Third Supplemental Indenture, dated as of June 23, 2015 (the “Third Supplemental Indenture”), among AV Homes, the Subsidiary Guarantors listed on the signature pages thereto and the AV Homes Convertible Notes Trustee, (iv) the Fourth Supplemental Indenture, dated as of July 17, 2015, between AV Homes and the AV Homes Convertible Notes Trustee, (v) the Fifth Supplemental Indenture, dated as of December 29, 2016, between AV Homes and the AV Homes Convertible Notes Trustee, and (vi) the Sixth Supplemental Indenture, dated as of January 11, 2018, between AV Homes and the AV Homes Convertible Notes Trustee, (as so supplemented and as supplemented by the Seventh Supplemental Indenture, the “AV Homes Convertible Notes Indenture”), which governs the $80 million aggregate principal amount of AV Homes’ 6.00% Convertible Senior Notes due 2020 (the “Convertible Notes”).
Following the Merger, each holder of the Convertible Notes has the right to (i) convert its Convertible Notes into $21.50 in cash, without any interest thereon, in respect of each share of AV Homes Common Stock into which the Convertible Notes would have otherwise been entitled to convert (including, for conversions “in connection with” (as defined in the Third Supplemental Indenture) the Merger, an increased conversion rate because the Merger constitutes a “Non-Stock Change of Control” under the terms of the Convertible Notes), or (ii) require that AV Homes repurchase such holder’s Convertible Notes, which repurchase shall be for the principal amount plus accrued and unpaid interest and settled in cash.
The Convertible Notes will mature on July 1, 2020. Interest on the Convertible Notes accrues at 6.00% per annum, paid semi-annually, in arrears, on January 1 and July 1 of each year.
The foregoing descriptions of the Base Indenture, the Third Supplemental Indenture and the Seventh Supplemental Indenture do not purport to be complete and are subject to, and qualified in their entirety by, the full text of the Base Indenture, Third Supplemental Indenture and Seventh Supplemental Indenture, which are included as Exhibits 4.3, 4.4, and 4.5, respectively, hereto and incorporated into this Item 1.01 by reference.
| Item 2.01. | Completion of Acquisition or Disposition of Assets. |
On the Closing Date, the Company completed the Acquisition of AV Homes. Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each issued and outstanding share of common stock, par value $1.00 per share, of AV Homes (the “Target Common Shares”) (excluding any shares (i) subject to vesting, repurchase or other lapse restriction granted under an AV Homes equity plan that is outstanding immediately prior to the Effective Time; (ii) held by any stockholder who properly demanded and perfected (and has not effectively withdrawn or lost) his, her or its appraisal rights with respect to such shares; or (iii) owned directly by AV Homes (or any wholly owned subsidiary of AV Homes), the Company or Merger Sub immediately prior to the Effective Time) was converted into the right to receive and become exchangeable for either (A) 0.9793 validly issued, fully paid and nonassessable shares of Class A common stock, $0.00001 par value per share, of the Company (“Company Shares”), pursuant to applicable election procedures (subject to pro ration as described below, “Stock Election Consideration”); (B) $21.50 in cash, without any interest thereon, pursuant to applicable election procedures (subject to pro ration as described below, the “Cash Election Consideration”); or (C) $12.64 in cash, without any interest thereon and 0.4034 validly issued, fully paid and nonassessable Company Shares (the “Mixed Election Consideration” and, together with the Cash Election Consideration and the Stock Election Consideration, “Merger Consideration”). The per share Cash Election Consideration and Stock Election Consideration were subject to adjustment pursuant to the terms of the Merger Agreement such that the aggregate Merger Consideration consisted of approximately 58.8% cash and approximately 41.2% Company Shares. The approximately 41.9% of AV Homes stockholders that elected to receive the Stock Election Consideration will receive 0.8908 Company Shares and $1.94 in cash, without interest thereon, in respect of each Target Common Share. The approximately 50.6% of AV Homes stockholders that elected to receive the Cash Election Consideration will receive $21.50 in cash, without interest thereon, in respect of each Target Common Share. The approximately 7.6% of AV Homes stockholders that elected or were deemed to have elected to receive the Mixed Election Consideration will receive 0.4034 Company Shares and $12.64 in cash, without interest thereon, in respect of each Target Common Share. No fractional Company Shares were issued in the Merger, and AV Homes stockholders received cash in lieu of any fractional shares.
Pursuant to the terms and subject to the conditions of the Merger Agreement, at the Effective Time, (a) each outstanding option to purchase Target Common Shares granted under an AV Homes equity plan and (b) each restricted stock unit or deferred stock unit award in respect of Target Common Shares granted under an AV Homes equity plan (each, a “Target RSU Award”) that was held by anon-employee director vested (to the extent unvested) and was cancelled and converted into the right to receive an amount in cash equal to the Cash Election Consideration in respect of each share of
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