| Item 1.01. | Entry into a Material Definitive Agreement. |
On October 16, 2018, Taylor Morrison Home Corporation (“Current Taylor Morrison”) announced its intention to implement a holding company reorganization (the “Reorganization”), effective October 26, 2018. The Reorganization will create a new holding company (“New Taylor Morrison” and, together with Current Taylor Morrison, “Taylor Morrison”) that will become the new parent of Current Taylor Morrison. New Taylor Morrison will assume the name Taylor Morrison Home Corporation.
In the Reorganization, Current Taylor Morrison’s stockholders will automatically become stockholders of New Taylor Morrison, on aone-for-one basis, with the same number and ownership percentage of shares of the same class as they held in Current Taylor Morrison immediately prior to the Reorganization. Following the Reorganization, the ticker symbol of New Taylor Morrison Class A common stock will remain “TMHC” and the CUSIP number will be the same as the CUSIP number for the Current Taylor Morrison Class A common stock.
In connection with the Reorganization, New Taylor Morrison entered into arrangements with certain holders of partnership units of TMM Holdings II Limited Partnership, the principal subsidiary of Current Taylor Morrison (“TMM II”), and the related shares of Current Taylor Morrison’s Class B common stock. Following the completion of the Reorganization, all of the outstanding partnership units of TMM II (“TMM II Units”) and corresponding paired shares of Class B common stock of New Taylor Morrison (held by persons other than New Taylor Morrison and its subsidiaries) will be exchanged (the “Exchange”) on aone-for-one basis for shares of Class A common stock of New Taylor Morrison.
The Reorganization is intended to simplify the company’s capital and tax structure and increase its operational flexibility. The agreements described below were entered into to effect the Exchange.
Amendment to Limited Partnership Agreement of TMM II
On October 15, 2018, a subsidiary of Current Taylor Morrison, TMM Holding II GP, ULC, as general partner of TMM II (the “General Partner”), entered into the Fourth Amendment to the Amended and Restated Agreement of Exempted Limited Partnership of TMM II (the “LPA Amendment”) with certain of the limited partners of TMM II, including certain members of management and the board of directors of Current Taylor Morrison.
Pursuant to the LPA Amendment, the parties agreed to add a drag-along provision to the partnership agreement, which provides that if one or more limited partners (each, a “Transferring Limited Partner”) of TMM II proposes to transfer TMM II Units and corresponding shares of Class B common stock (collectively, “Paired Interests”), representing, at the time of such transfer, 50% or more of the issued and outstanding Paired Interests that are not held by Taylor Morrison and its subsidiaries, then the General Partner shall have the right to require each other limited partner of TMM II to transfer such limiter partner’s Paired Interests for the same amount per Paired Interest and form of consideration and on the same terms and conditions as the Transferring Limited Partners (including customary representations, covenants, indemnities and agreements, as applicable).
Contribution Agreement
On October 16, 2018, Current Taylor Morrison entered into a Contribution Agreement (the “Contribution Agreement”) with New Taylor Morrison and the holders of Current Taylor Morrison’s Class B common stock and paired TMM II Units party thereto, including certain members of management and the board of directors of Current Taylor Morrison. The General Partner exercised the drag-along provision in the LPA Amendment and required certain of the limited partners of TMM II to enter into the Contribution Agreement.
Pursuant to the Contribution Agreement, the holders of Current Taylor Morrison’s Class B common stock and paired TMM II Units (“Paired Interest Holders”) agreed that, following the consummation of the Reorganization, each Paired Interest Holder would contribute its shares of New Taylor Morrison’s Class B common stock and paired TMM II Units to New Taylor Morrison, on aone-for-one basis, in exchange for shares of New Taylor Morrison’s Class A common stock. The Contribution Agreement includes customary representations and warranties of New Taylor Morrison and the Paired Interest Holders party thereto.
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