| Item 1.01. | Entry into a Material Definitive Agreement. |
On January 16, 2024, Five Point Operating Company, LP, a Delaware limited partnership through which Five Point Holdings, LLC owns all of its assets and conducts all of its operations (the “Issuer”), and Five Point Capital Corp., a Delaware corporation and wholly owned subsidiary of the Issuer (the “Co-Issuer” and, together with the Issuer, the “Issuers”), settled the previously announced exchange offer (the “Exchange Offer”) to exchange any and all of the Issuers’ 7.875% Senior Notes due 2025 (the “Existing Notes”), of which $625,000,000 aggregate principal amount was outstanding immediately prior to the Exchange Offer, for new 10.500% Initial Rate Senior Notes due 2028 (the “New Notes”). Pursuant to the Exchange Offer, the Issuers exchanged $623,500,000 aggregate principal amount of Existing Notes, which represented 99.76% of the Existing Notes outstanding immediately prior to the Exchange Offer, for $523,494,301 aggregate principal amount of New Notes and approximately $100,000,000 of aggregate cash consideration.
The New Notes were issued to holders of Existing Notes reasonably believed to be “qualified institutional buyers” as defined in Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), in a private transaction in reliance upon the exemption from the registration requirements of the Securities Act provided by Section 4(a)(2), and outside of the United States, to holders of Existing Notes who are not U.S. persons and who are not acquiring the New Notes for the account or benefit of a U.S. person, in offshore transactions in compliance with Regulation S under the Securities Act, and in Canada on a private placement basis to holders of Existing Notes who are “accredited investors” and “permitted clients,” each as defined under applicable Canadian provincial securities laws, that in each case are not individuals.
The New Notes were issued pursuant to an indenture, dated as of January 16, 2024 (the “Indenture”), among the Issuers, the Guarantors party thereto (the “Guarantors”), and Computershare Trust Company, N.A. (the “Trustee”).
The New Notes will mature on January 15, 2028 (the “Maturity Date”). The New Notes accrue interest at a rate of 10.500% per annum from and including January 16, 2024 to, but not including, November 15, 2025, 11.000% per annum from and including November 15, 2025 to, but not including, November 15, 2026, and 12.000% per annum from and including November 15, 2026 to, but not including, the Maturity Date. Interest on the New Notes is payable semi-annually on each May 15 and November 15, commencing May 15, 2024.
The New Notes are guaranteed (the “New Note Guarantees”), jointly and severally, by each of the Issuer’s existing and future direct and indirect domestic subsidiaries (other than the Co-Issuer) that guarantees its obligations under the Issuer’s senior unsecured revolving credit facility (the “Revolving Credit Facility”), the Existing Notes that remain outstanding, or any other syndicated loan facility or capital markets indebtedness, subject to certain exceptions. Under certain circumstances, the Guarantors may be automatically released from their New Note Guarantees without the consent of the holders of New Notes.
The New Notes and the New Note Guarantees are the Issuers’ and the Guarantors’ senior unsecured obligations and are senior in right of payment to all of the Issuers’ and the Guarantors’ subordinated indebtedness, equal in right of payment with all of the Issuers’ and the Guarantors’ senior indebtedness (including any indebtedness under the Revolving Credit Facility and the Existing Notes that remain outstanding), without giving effect to collateral arrangements in the case of secured indebtedness, effectively subordinated to any of the Issuers’ and the Guarantors’ secured indebtedness, to the extent of the value of the assets securing such indebtedness, and structurally subordinated to all of the existing and future liabilities (including trade payables but excluding intercompany liabilities) or preferred equity of each of the Issuer’s subsidiaries that do not guarantee the New Notes (other than such indebtedness and liabilities owed to the Issuers or one of the Guarantors and other than the Co-Issuer).
The Issuers are entitled, on any one or more occasions, to redeem all or a part of the New Notes issued under the Indenture at the redemption prices (expressed as percentages of principal amount of the New Notes being redeemed) set forth during the periods indicated below plus accrued and unpaid interest, if any, on the New Notes redeemed to, but excluding, the applicable redemption date:
| | | | |
| Period | | Redemption
Price | |
On or prior to November 14, 2024 | | | 104.000 | % |
November 15, 2024 through November 14, 2025 | �� | | 102.000 | % |
November 15, 2025 and thereafter | | | 100.000 | % |
