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EXHIBIT 99.1
[MERITAGE CORPORATION LOGO]
Contacts: ARIZONA: TEXAS: NEW YORK:
Larry Seay Jane Hays Mark Kollar
CFO & Vice President-Finance Vice President-Corp. Develop. Broadgate Consultants
(480) 998-8700 (972) 612-8085 (212) 232-2222
MERITAGE CORP. COMPLETES ACQUISITION OF HANCOCK COMMUNITIES
TO BE ACCRETIVE TO MERITAGE'S 2001 EARNINGS
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DALLAS, TEXAS AND SCOTTSDALE, ARIZONA - MAY 31, 2001 -- Meritage Corp. (NYSE:
MTH) today announced that it has completed the purchase of Hancock Communities,
a privately held builder of quality entry-level and move-up homes. In 2000,
Hancock Communities ranked as the sixth largest homebuilder in metropolitan
Phoenix, Arizona. The acquisition is expected to be accretive to Meritage's
earnings in 2001 after giving effect to transaction-related expenses.
Meritage paid approximately $70.0 million in cash, and assumed trade
payables, accrued liabilities, customer deposits and a note, approximating $8.0
million. It has also agreed to pay Greg Hancock an earn-out over the next three
years equal to 20% of Hancock's pre-tax net income after a 10.5% charge on
capital.
The Company also announced that it has closed its private placement of
$165 million in principal amount of its 9-3/4% senior notes due June 1, 2011.
The offering was made pursuant to Rule 144A and Regulation S under the
Securities Act of 1933. The notes were issued at a price of 100% of the
principal amount, with interest payable semi-annually in arrears on June 1st and
December 1st of each year, starting on December 1, 2001. Of the $165 million
gross proceeds, $70.0 million was used to fund the cash requirements of the
Hancock acquisition, $74.1 million was used to pay down the Company's senior
bank credit facilities, $15.9 million was used to repay the Company's existing
senior notes, including prepayment costs and accrued interest, and
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MERITAGE CLOSES ACQUISITION / 2
approximately $5 million will be used to pay fees, costs, commissions and other
costs of the foregoing.
The notes have not been registered under the Securities Act of 1933 or
any applicable state securities laws and may not be offered or sold in the
United States absent registration or an applicable exemption from registration
requirements. This press release does not constitute an offer to sell or the
solicitation of an offer to buy the notes or any other securities.
As a result of the prepayment of the $15 million existing senior notes
due in 2005, Meritage will incur a one-time, after tax charge in the second
quarter of the year of approximately $550,000 relating to the early
extinguishment of this debt.
About Meritage Corp.
Meritage Corp. designs, builds and sells distinctive single-family
homes ranging from entry-level to semi-custom luxury. The Company operates in
the Phoenix and Tucson, Arizona markets as Monterey Homes, Meritage Homes and
Hancock Communities; in the Dallas/Ft. Worth, Austin and Houston, Texas markets
as Legacy Homes; and in the San Francisco Bay and Sacramento, California markets
as Meritage Homes. For more information about Meritage Corp., please visit the
Company's Web site at http://www.meritagehomes.com.
Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Such statements
include, but are not limited to, statements concerning the transaction with
Hancock Communities, including that the acquisition will be accretive in 2001.
Such statements are based upon the current beliefs and expectations of
Meritage's management and are subject to significant risks and uncertainties.
Actual results may differ from those set forth in the forward-looking
statements.
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MERITAGE CLOSES ACQUISITION / 3
With respect to the Hancock transaction, these uncertainties include:
the risk that the businesses will not be integrated successfully; that the
market and financial synergies anticipated from the acquisition may not be fully
realized or may take longer to realize than expected; that the acquisition will
not be accretive to earnings within the time period estimated by management, or
at all; that unanticipated expenses and liabilities may be incurred; that the
combined companies will lose key employees or suppliers; and increased
competition.
In addition, the Company's business is subject to a number of risks and
uncertainties including the strength and competitive pricing environment of the
single-family housing market; changes in the availability and pricing of
residential mortgages; changes in the availability and pricing of real estate in
the markets in which the Company operates; demand for and acceptance of the
Company's homes; the success of planned marketing and promotional campaigns; the
success of the Company's program to integrate existing operations with its
planned new operations or those of past or future acquisitions; recent
legislative or other initiatives that seek to restrain growth in new housing
construction or similar measures; general economic slow downs; and other factors
identified in documents filed by the Company with the Securities and Exchange
Commission, including those set forth in the Company's Form 10-K Report for the
year ended December 31, 2000 under the captions "Market of the Registrant's
Common Stock and Related Stockholder Matters - Factors that May Affect Future
Stock Performance" and "Management's Discussion and analysis of Financial
Condition of the Company" and Exhibit 99.1 to the Company's Form 10-Q Report for
the quarter ended March 31, 2001. As a result of these and other factors, the
Company's stock and bond prices may fluctuate dramatically.
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