Item 1.01. Entry into a Material Definitive Agreement.
On June 5, 2019, Taylor Morrison Communities, Inc. (the “Issuer”), a wholly owned subsidiary of Taylor Morrison Home Corporation (the “Company”), completed the issuance of $500.0 million aggregate principal amount of 5.875% Senior Notes due 2027 (the “Notes”).
The Notes were issued pursuant to an Indenture (the “Indenture”), dated as of June 5, 2019, by and among the Issuer, the guarantors party thereto (collectively, the “Guarantors”) and U.S. Bank National Association, as trustee, and are senior unsecured obligations of the Issuer. The Guarantors have issued guarantees (the “Guarantees”) of the Issuer’s obligations under the Notes and the Indenture on a senior unsecured basis. The Guarantors are the same subsidiaries of the Company that guarantee, or areco-issuers of, the Issuer’s existing 5.875% Senior Notes due 2023 and 5.625% Senior Notes due 2024.
The Notes will mature on June 15, 2027. Interest on the Notes will accrue at 5.875% per annum, paid semi-annually, in arrears, on June 15 and December 15 of each year, commencing December 15, 2019.
The Notes and the Guarantees are senior unsecured obligations of the Issuer and the Guarantors.
The Notes and the Guarantees rank:
| | • | | pari passu in right of payment with any senior indebtedness of the Issuer and the Guarantors; |
| | • | | senior in right of payment to any indebtedness of the Issuer and the Guarantors that is contractually subordinated to the Notes and the Guarantees; |
| | • | | effectively junior to any secured indebtedness of the Issuer and the Guarantors, to the extent of the value of the collateral securing such secured indebtedness; and |
| | • | | effectively junior to all obligations of the Issuer’s subsidiaries that are not Guarantors. |
At any time prior to March 15, 2027, the Issuer is entitled to redeem all or a part of the Notes at a redemption price equal to 100% of the principal amount of the Notes redeemed plus the applicable “make whole” premium as of, and accrued and unpaid interest to, but excluding, the date of redemption, subject to the rights of holders of record of Notes on the relevant record date to receive interest due on the relevant interest payment date.
On or after March 15, 2027, the Issuer is entitled to redeem all or a part of the Notes upon not less than 30 nor more than 60 days’ notice, at a redemption price equal to 100% of the principal amount of the Notes redeemed plus accrued and unpaid interest to, but excluding, the date of redemption, subject to the rights of holders of record of Notes on the relevant record date to receive interest due on the relevant interest payment date.
Upon certain ratings declines with respect to the Notes in connection with a change of control, as described in the Indenture, the Issuer must offer to repurchase the Notes at 101% of the principal amount, plus accrued and unpaid interest, if any, to, but not including, the purchase date.
The Indenture contains covenants that, among other things, restrict the ability of the Issuer and Taylor Morrison Holdings, Inc., the direct parent of the Issuer and a Guarantor, and
