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Form 8-K Forestar Group Inc. For: Nov 18

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November 18, 2014 5:24 PM EST


�

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
�
Form�8-K
�
CURRENT REPORT
PURSUANT TO SECTION�13 OR 15(d)�OF THE
SECURITIES EXCHANGE ACT OF 1934
�
Date of Report: November 18, 2014
(Date of earliest event reported)
�
FORESTAR GROUP INC.
(Exact name of registrant as specified in its charter)
�
Delaware
�
Commission File Number
�
26-1336998
(State or other jurisdiction of incorporation or organization)
�
001-33662
�
(I.R.S. Employer
Identification No.)
�

6300 Bee Cave Road, Building Two, Suite�500
Austin, Texas 78746
(Address of principal executive offices) (zip code)
�
(512)�433-5200
(Registrants telephone number, including area code)
�

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:�
o������ Written communications pursuant to Rule�425 under the Securities Act (17 CFR 230.425)
o������ Soliciting material pursuant to Rule�14a-12 under the Exchange Act (17 CFR 240.14a-12)
o������ Pre-commencement communications pursuant to Rule�14d-2(b)�under the Exchange Act (17 CFR 240.14d-2(b))
o������ Pre-commencement communications pursuant to Rule�13e-4(c)�under the Exchange Act (17 CFR 240.13e-4(c))

�







Item 7.01. Regulation FD Disclosure.
On November 18, 2014, the Board of Directors of Forestar Group Inc. (the Company) sent a letter to SpringOwl Asset Management, LLC (SpringOwl) responding to SpringOwls October 10, 2014 presentation and October 15 and October 24, 2014 letters to the Company, referenced in a Schedule 13D filed by SpringOwl and Cove Street Capital, LLC on November 14, 2014. A copy of the letter from the Board of Directors is attached to this Current Report on Form 8-K and is incorporated herein by reference.


Forward Looking Statements
This Current Report contains forward-looking statements within the meaning of the federal securities laws. Forward-looking statements are typically identified by words or phrases such as will, anticipate, estimate, expect, project, intend, plan, believe, target, forecast, and other words and terms of similar meaning. These statements reflect managements current views with respect to future events and are subject to risk and uncertainties. We note that a variety of factors and uncertainties could cause our actual results to differ significantly from the results discussed in the forward-looking statements, including but not limited to: general economic, market, or business conditions; changes in commodity prices; opportunities (or lack thereof) that may be presented to us and that we may pursue; fluctuations in costs and expenses including development costs; demand for new housing, including impacts from mortgage credit rates or availability; lengthy and uncertain entitlement processes; cyclicality of our businesses; accuracy of accounting assumptions; competitive actions by other companies; changes in laws or regulations; and other factors, many of which are beyond our control. Except as required by law, we expressly disclaim any obligation to publicly revise any forward-looking statements contained in this Current Report to reflect the occurrence of events after the date of this Current Report.

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Item 9.01. Financial Statements and Exhibits.
�(d)��������Exhibits.
Exhibit No.
�
Description of Exhibit
�
�
�
99.1
�
Letter dated November 18, 2014 from the Board of Directors of the Company to SpringOwl Asset Management, LLC.



2



SIGNATURE
�
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.
�
�
�
FORESTAR GROUP INC.
�
�
�
�
Date: November 18, 2014
By:
/s/ David M. Grimm
�
Name:
David M. Grimm
�
Title:
Chief Administrative Officer

3



EXHIBIT�INDEX
�
Exhibit No.
�
Description of Exhibit
�
�
�
99.1
�
Letter dated November 18, 2014 from the Board of Directors of the Company to SpringOwl Asset Management, LLC.


4


Exhibit 99.1





November 18, 2014


Mr. Andrew M. Wallach
SpringOwl Asset Management, LLC
1370 Avenue of the Americas
28th Floor
New York, NY 10019


Dear Mr. Wallach:

Forestar Group Inc. Board of Directors acknowledges receipt of your letters dated October 15 and October 24, 2014, and the Situation Overview presentation. The Board appreciates your perspectives and encourages open communication with all Forestar shareholders. The information was discussed at Forestars November Board meeting, and this letter is the Boards response.

The Board and management team are committed to maximizing long-term shareholder value. Consistent with that goal, the companys strategy is focused on recognizing and responsibly delivering the greatest value from every acre and growing through strategic and disciplined investments.

The company is successfully executing its strategy and is on target to deliver its Growing FORward initiatives which has increased earnings, returns and the value of the company. For example, the company has increased total segment EBITDA from essentially break-even results in 2011 to approximately $117 million in 2013, and the company is on track to deliver over $140 million in total segment EBITDA in 2014. In fact, the company is targeting $200 million in total segment EBITDA by 2016, which, on a fully diluted basis, would increase EBITDA per share by four and a half times compared to the average of 2008 - 2011, the first four years Forestar operated as a stand-alone public company. In addition, the company has increased returns over this same time period, with return on assets up almost 70% over the last three years.

The company has repurchased over two million shares of common stock since 2009, and recently announced plans to purchase $55 million of common stock under the existing repurchase program, representing almost 10% of the companys market capitalization on the date of announcement.

Forestar continuously evaluates its portfolio of assets and has repositioned over $250 million in non-core timberland since 2009 and will continue to identify and monetize non-core assets going forward. In fact, by 2016, the company is targeting to reposition an additional $100 million of non-core assets across our portfolio.

The company also recently announced that the Board of Directors has voted to recommend declassification of the Board, which if approved by stockholders, will ultimately result in all directors being elected on an annual basis.

In evaluating your analysis and recommendations, several inaccuracies in your assumptions were noted. These include underestimation of considerable tax consequences associated with the sale of assets under your net asset value approach, as well as some of your key valuation assumptions which are not supportable given available transaction data for like assets in similar markets. It also appears that your assumptions related to Forestars ownership of certain venture assets were incorrect.



6300 Bee Cave Road / Building Two, Suite 500 / Austin, TX 78746-5149 / T 512.433.5200 / F 512.433.5201 / www.forestargroup.com


Mr. Andrew M. Wallach
November 18, 2014
Page 2


The Board of Directors regularly reviews the companys strategy. The Board is convinced that execution of the strategy and Growing FORward initiatives will maximize and grow long-term shareholder value. In addition, the Board strongly supports the management team and is confident that the company has the leadership, talent and resources to deliver the results we expect.

Sincerely,



Board of Directors
Forestar Group Inc.

6300 Bee Cave Road / Building Two, Suite 500 / Austin, TX 78746-5149 / T 512.433.5200 / F 512.433.5201 / www.forestargroup.com


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