| Item 1.01. | Entry into a Material Definitive Agreement. |
Registration Rights Agreement
On May 23, 2019, Century Communities, Inc. (the “Company”) and its subsidiary guarantors party thereto (the “Guarantors”) entered into a Registration Rights Agreement (the “Registration Rights Agreement”) with J.P. Morgan Securities LLC, as representative of the initial purchasers, in connection with a private offering (the “Offering”) of $500 million aggregate principal amount of the Company’s 6.750% Senior Notes due 2027 (the “Notes”).
Under the Registration Rights Agreement, the Company and the Guarantors have agreed, subject to certain exceptions, to (i) file a registration statement (the “Exchange Offer Registration Statement”) with the U.S. Securities and Exchange Commission (the “SEC”), with respect to a registered offer to exchange the Notes for new notes of the Company having terms substantially identical in all material respects to the Notes (the “Exchange Notes”), within 180 days after May 23, 2019 (the “Closing Date”), (ii) use commercially reasonable efforts to cause the Exchange Offer Registration Statement to be declared effective under the Securities Act of 1933, as amended (the “Securities Act”), within 240 days after the Closing Date, (iii) consummate the exchange offer as soon as practicable after the effectiveness of the Exchange Offer Registration Statement, but in no event later than 270 days after the Closing Date, and (iv) keep the exchange offer open for not less than 30 days (or longer if required by applicable law). Under certain circumstances, including if the Company is unable to consummate an exchange offer within 270 days after the Closing Date, the Company may be required to file a shelf registration statement with respect to the Notes. If the Company defaults on certain of its requirements under the Registration Rights Agreement, the Company has agreed to pay under certain circumstances additional interest to the holders of the affected Notes at a rate of 0.25% per annum for the first90-day period immediately following the occurrence of such default, with such rate increasing by an additional 0.25% per annum with respect to each subsequent90-day period until all such defaults have been cured, up to a maximum additional interest rate of 1.0% per annum.
The foregoing description of the Registration Rights Agreement contained herein does not purport to be complete and is qualified in its entirety by reference to the complete terms of the Registration Rights Agreement, a copy of which is filed as Exhibit 10.1 to this Current Report on Form8-K and is incorporated herein by reference.
Indenture; 6.750% Senior Notes due 2027
On the Closing Date, the Company and the Guarantors entered into an Indenture (the “Indenture”) with U.S. Bank National Association, as trustee (the “Trustee”), pursuant to which the Notes were issued.
The Notes will mature on June 1, 2027. Interest is payable on the Notes semi-annually in cash in arrears on June 1 and December 1 of each year, beginning on December 1, 2019, and will accrue from the Closing Date.
The Notes are general unsecured senior obligations of the Company and are guaranteed on an unsecured senior basis by the Guarantors. The Notes and the guarantees are subordinated to all of the Company’s and the Guarantors’ existing and future secured debt to the extent of the assets securing that secured debt. In addition, the Notes are effectively subordinated to all of the liabilities of the Company’s subsidiaries that are not guaranteeing the Notes.
If the Company experiences certain change of control events, each holder of Notes will have the right to require the Company to repurchase such holder’s Notes at a cash purchase price equal to 101% of the principal amount thereof on the date of repurchase plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase. The Notes will be redeemable on or after June 1, 2022 at certain specified redemption prices as set forth under the Indenture. In addition, the Company may redeem up to 100% of the Notes before June 1, 2022 at a make-whole premium, and up to 40% of the Notes before June 1, 2022, with the net cash proceeds from certain equity offerings.
The Indenture contains covenants that, among other things, restrict the Company’s ability and the ability of certain of the Company’s subsidiaries to: incur or guarantee additional indebtedness; create liens on assets; pay dividends or purchase or redeem its capital stock; prepay, redeem or repurchase certain debt; enter into agreements restricting the ability of the Company’s subsidiaries to pay dividends; make certain investments; sell assets; issue preferred stock; enter into transactions with its affiliates; or effect a consolidation or merger. These covenants are subject to a number of important qualifications and exceptions.
