KB Home (KBH) to Sell 5.5M Common at $18.25/Share

January 24, 2013 6:45 AM EST
KB Home (NYSE: KBH) has agreed to sell an aggregate of 5.5 million shares of its common stock at a public offering price of $18.25 per share (or up to 6.325 million shares if the underwriters exercise their option to purchase additional shares) and $200 million in aggregate principal amount of its 1.375% convertible senior notes due 2019 (or up to $230 million in aggregate principal amount if the underwriters exercise their over-allotment option) in its previously announced concurrent underwritten public offerings.

The convertible senior notes will bear interest at a rate of 1.375% per year, payable semi-annually in arrears, and will mature in 2019, unless earlier purchased, redeemed or converted. The senior notes are convertible into shares of KB Home’s common stock at an initial conversion rate of 36.5297 shares per $1,000 principal amount of senior notes, which is equal to a conversion price of approximately $27.37 per share, subject to adjustment in certain circumstances. The convertible senior notes will be guaranteed on an unsecured senior basis by certain of KB Home’s subsidiaries that have guaranteed KB Home’s outstanding senior notes.

KB Home estimates the aggregate net proceeds from the concurrent offerings to be approximately $289 million (assuming no exercise of the underwriters’ options), after deducting the underwriting discount and estimated offering expenses payable by KB Home. KB Home intends to use the net proceeds from both offerings for general corporate purposes, including without limitation land acquisition and development. The closing of both offerings is expected to occur on January 29, 2013, subject to the satisfaction of customary closing conditions.

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