SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): November 23, 2005
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Orleans Homebuilders, Inc.
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(Exact Name of Registrant as Specified in Charter)
Delaware 1-6830 59-0874323
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
One Greenwood Square, Suite 101
3333 Street Road, Bensalem, PA 19020
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (215) 245-7500
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities
Act(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On November 23, 2005, Orleans Homebuilders, Inc. (the "Company") completed a
private placement issuance and sale of $75.0 million in aggregate principal
amount of trust preferred securities issued by its wholly-owned subsidiary,
Orleans Homebuilders Trust II, a Delaware statutory trust (the "Trust"). The
Trust simultaneously issued 2,320 of its common securities to OHI Financing,
Inc., the Company's wholly-owned subsidiary, for a purchase price of $2.32
million, which, together with the trust preferred securities, constitutes all
of the issued and outstanding securities of the Trust. The Trust's common
securities are subordinated to the Trust's preferred securities with respect to
distributions by the Trust to the holders of the Trust's securities.
The Trust's preferred and common securities require quarterly distributions of
interest by the Trust to the holders of the Trust securities at a fixed
interest rate equal to 8.61% per annum through January 30, 2016 and, after
January 30, 2016, at a variable interest rate (reset quarterly) equal to the
three-month London Interbank Offered Rate ("LIBOR") plus 360 basis points. In
the event the Company fails to meet the debt service ratio or minimum tangible
net worth requirement set forth in the Indenture described below, as of the end
of any three of four consecutive fiscal quarters, the applicable rate of
interest will be increased by 300 basis points. The interest rate will return
to the regularly applicable rate once the Company is in compliance with the
debt service ratio and minimum tangible net worth requirements as of the end of
any fiscal quarter. The terms of the Trust securities are governed by an
Amended and Restated Trust Agreement, dated November 23, 2005 among OHI
Financing, Inc., as depositor, JPMorgan Chase Bank, National Association, as
property trustee, Chase Bank USA, National Association, as the Delaware
trustee, and the administrative trustees named therein.
The Trust used the proceeds from the sale of the Trust's securities to purchase
$77.32 million in aggregate principal amount of unsecured junior subordinated
notes due January 30, 2036 issued by OHI Financing, Inc. The junior
subordinated notes were issued pursuant to a Junior Subordinated Indenture,
dated November 23, 2005, among OHI Financing, Inc., as issuer, and JPMorgan
Chase Bank, National Association, as trustee. The terms of the junior
subordinated notes are substantially the same as the terms of the Trust's
preferred securities. The interest payments on the junior subordinated notes
paid by OHI Financing, Inc. will be used by the Trust to pay the quarterly
distributions to the holders of the Trust's preferred and common securities.
Pursuant to the Parent Guarantee Agreement dated November 23, 2005 by and
between the Company and JPMorgan Chase Bank, National Association, as trustee,
the Company has unconditionally guaranteed OHI Financing, Inc.'s payment and
other obligations under the Indenture and the junior subordinated notes. The
Company used the proceeds from the issuance and sale of the trust preferred
securities and the subsequent purchase of the junior subordinated notes to
partially repay indebtedness.
The Indenture permits OHI Financing, Inc. to redeem the junior subordinated
notes at par, plus accrued interest on or after January 30, 2011. If OHI
Financing, Inc. redeems any amount of the junior subordinated notes, the Trust
Agreement requires the Trust to redeem a
like amount of the trust securities. Under certain circumstances relating to
the tax treatment of the Trust or the interest payments made on the junior
subordinated notes or the classification of the Trust as an "investment
company" under the Investment Company Act of 1940, OHI Financing, Inc. may also
redeem the junior subordinated notes prior to January 30, 2011 at a 7.5%
premium.
With certain exceptions relating to debt to a trust, partnership or other
entity affiliated with the Company that is a financing vehicle for the Company,
the junior subordinated notes and the Company's obligations under the Parent
Guarantee are expressly subordinate to all of the Company's existing and future
debt unless it is provided in the instrument creating or evidencing such debt,
or pursuant to which such debt is outstanding, that such debt is not superior
in right to payment of the junior subordinated notes or the obligations under
the Parent Company's guarantee, as the case may be.
The junior subordinated notes and the Trust securities could become immediately
payable upon an event of default. Under the terms of the Trust Agreement and
the Indenture, an event of default generally occurs upon:
o non-payment of any interest on the junior subordinated notes when
it becomes due and payable, and continuance of the default for a
period of 30 days;
o non-payment of the principal of, or any premium on, the junior
subordinated notes at their maturity;
o default in the performance, or breach, of any covenant or warranty
made by OHI Financing, Inc., in the Indenture and the continuance
of the default or breach for a period of 30 days after written
notice to OHI Financing, Inc.;
o non-payment of any distribution on the Trust's securities when it
becomes due and payable, and continuance of the default for a
period of 30 days;
o non-payment of the redemption price of any Trust's security when it
becomes due and payable;
o default in the performance, or breach, in any material respect of
any covenant or warranty of any of the trustees in the Trust
Agreement, which default or breach continues for a period of 30
days after written notice to the trustees and OHI Financing, Inc.;
o default in the performance, or breach (which default or breach must
be material in certain cases), of any covenant or warranty made by
OHI Financing, Inc. in the Purchase Agreement pursuant to which the
Trust securities and the junior subordinated notes were sold and
purchased and the continuation of such default or breach for a
period of 30 days after written notice to OHI Financing, Inc.;
o payment of increased interest for four consecutive quarters due to
the Company's failure to meet the applicable debt coverage ratio or
minimum consolidated tangible net worth levels set forth in the
Indenture;
o bankruptcy, insolvency or liquidation of the property trustee, if a
successor property trustee has not been appointed within 90 days
thereafter;
o the bankruptcy or insolvency of OHI Financing, Inc.; or
o certain dissolutions or liquidations, or terminations of the
business or existence, of the Trust.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
The information set forth in Item 1.01 above is incorporated by reference as
if fully set forth herein.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
The following exhibits are filed with this Current Report on Form 8-K:
Exhibit
No. Description
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10.1 Junior Subordinated Indenture by and between OHI
Financing, Inc. and JPMorgan Chase Bank, National
Association, dated November 23, 2005.
10.2 Amended and Restated Trust Agreement by and among OHI
Financing, Inc., JPMorgan Chase Bank, National
Association, Chase Bank USA, National Association and the
Administrative Trustees named therein, dated
November 23, 2005.
10.3 Parent Guarantee Agreement by and between Orleans
Homebuilders, Inc. and JPMorgan Chase Bank, National
Association, dated November 23, 2005.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ORLEANS HOMEBUILDERS, INC.
Dated: November 30, 2005 Joseph A. Santangelo
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By: Joseph A. Santangelo
Chief Financial Officer
EXHIBIT INDEX
The following exhibits are filed as part of this Current Report on Form 8-K:
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Exhibit
No. Item
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10.1 Junior Subordinated Indenture by and between OHI Financing,
Inc. and JPMorgan Chase Bank, National Association, dated
November 23, 2005.
10.2 Amended and Restated Trust Agreement by and among OHI
Financing, Inc., JPMorgan Chase Bank, National Association,
Chase Bank USA, National Association and the Administrative
Trustees named therein, dated November 23, 2005.
10.3 Parent Guarantee Agreement by and between Orleans
Homebuilders, Inc. and JPMorgan Chase Bank, National
Association, dated November 23, 2005.