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Form 8-K Forestar Group Inc. For: Dec 30

December 31, 2015 4:13 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: December 30, 2015
(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
(Registrant’s 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 1.01. Entry into a Material Definitive Agreement.
 
The information set forth under Item 2.03 of this Current Report on Form 8-K with respect to the Credit Agreement (as defined herein) is hereby incorporated into this Item 1.01 by reference.
 
Item 2.03. Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.
 
On December 30, 2015, Forestar Group Inc. (the “Company”) entered into an amendment (the "Amendment") to its Third Amended and Restated Revolving Credit Agreement (the "Credit Agreement") among the Company; Forestar (USA) Real Estate Group Inc., and certain of its wholly-owned subsidiaries signatory thereto; KeyBank National Association, as lender, swing line lender and agent; the lenders party thereto; and the other parties thereto.

The Amendment reduces the interest coverage ratio requirement from 2.50:1.0 to 2.25:1.0 for the quarters ending December 31, 2015, and March 31, 2016. Thereafter, the interest coverage ratio requirement returns to 2.50:1.0.

The Amendment also provides that the borrower may make distributions to the Company in an aggregate amount not to exceed $50,000,000 to enable the Company to repurchase its common stock and to pay special dividends to its shareholders, such distributions to be funded from up to 65% of the net proceeds from the sales of multifamily properties and non-core assets, such as the Radisson Hotel in Austin, Texas, and any oil & gas properties. The Amendment provides the Company with flexibility to repurchase stock or pay a special dividend should its Board of Directors determine that the Company should do so, though no such decisions have been made at this time.

Some of the lenders under the Credit Agreement and their affiliates have or may have had customary banking relationships with the Company based on the provision of a variety of financial services, including cash management, investment banking, and equipment financing and leasing services, none of which are material individually or in the aggregate with respect to any individual party.

The foregoing summary of the Amendment does not purport to be complete and is qualified in its entirety by reference to the text of the Amendment filed as Exhibit 10.1 to this Form 8-K and incorporated by reference herein.

 
Item 9.01. Financial Statements and Exhibits.
 
(d)        Exhibits.
 
Exhibit No.
 
Exhibit
 
 
 
10.1
 
First Amendment to Third Amended and Restated Revolving and Term Credit Agreement dated December 30, 2015, by and among the Company; Forestar (USA) Real Estate Group Inc. and certain of its wholly-owned subsidiaries signatory thereto; KeyBank National Association, as lender, swing line lender and agent; the lenders party thereto; and the other parties thereto.




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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: December 31, 2015
By:
/s/ Charles D. Jehl
 
 
Name:
Charles D. Jehl
 
 
Title:
Chief Financial Officer

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EXHIBIT INDEX
 
Exhibit No.
 
Exhibit
 
 
 
10.1
 
First Amendment to Third Amended and Restated Revolving and Term Credit Agreement dated December 30, 2015, by and among the Company; Forestar (USA) Real Estate Group Inc. and certain of its wholly-owned subsidiaries signatory thereto; KeyBank National Association, as lender, swing line lender and agent; the lenders party thereto; and the other parties thereto.


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Exhibit 10.1



FIRST AMENDMENT TO THIRD AMENDED AND RESTATED REVOLVING
CREDIT AGREEMENT

This FIRST AMENDMENT TO THIRD AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT (this “Amendment”), made as of December 30, 2015, among FORESTAR (USA) REAL ESTATE GROUP INC., a Delaware corporation (“Borrower”), the undersigned Guarantors, KEYBANK NATIONAL ASSOCIATION, a national banking association (“KeyBank”), and the other financial institutions party to the Credit Agreement as lenders (each individually a “Lender” and collectively, “Lenders”), and KEYBANK NATIONAL ASSOCIATION, as Agent for the Lenders (in such capacity, “Agent”) and Swing Line Lender.
W I T N E S S E T H:
WHEREAS, Borrower, Guarantors, Agent and certain of the Lenders previously entered into a Revolving and Term Credit Agreement dated as of December 14, 2007, as amended by that certain First Amendment to Revolving and Term Credit Agreement and Other Loan Documents dated as of March 12, 2008, that certain Second Amendment to Revolving and Term Credit Agreement dated as of July 16, 2009, as amended and restated by that certain Amended and Restated Revolving and Term Credit Agreement dated as of August 6, 2010, as amended by that certain First Amendment to Amended and Restated Revolving and Term Credit Agreement dated as of May 6, 2011, that certain Second Amendment to Amended and Restated Revolving and Term Credit Agreement dated as of September 30, 2011, as amended and restated by that certain Second Amended and Restated Revolving and Term Credit Agreement dated as of September 14, 2012, as amended by that certain First Amendment to Second Amended and Restated Revolving and Term Credit Agreement dated as of March 14, 2014 and that certain Second Amendment to Second Amended and Restated Revolving and Term Credit Agreement dated as of May 15, 2014, which amended and restated and re-designated such Revolving and Term Credit Agreement as the “Third Amended and Restated Credit Agreement” (as so amended and restated, the “Existing Credit Agreement”), pursuant to which Lenders established and continued a revolving credit facility and a term loan facility for the benefit of Borrower (all capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Existing Credit Agreement); and
WHEREAS, Borrower has requested that certain terms of the Credit Agreement be modified and amended as hereinafter set forth; and
WHEREAS, Lenders and Agent have agreed to such amendments as set forth herein, subject to the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Amendment hereby agree that all capitalized terms used but not defined herein shall have the meanings ascribed thereto in the Credit Agreement, and hereby further agree as follows:



NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Amendment hereby agree as follows:
1.Amendments to §8.7 of the Credit Agreement. Section 8.7 of the Credit Agreement, Distributions, is hereby modified and amended as follows:
(a)by deleting the word “and” before clause (h) and by inserting a comma at the end of clause (h) in lieu of the period.
(b)by inserting a new clause (i) at the end of Section 8.7 after the proviso in clause (h):
“, and (i) so long as no Default or Event of Default shall have occurred and be continuing, Borrower may make Distributions in an aggregate amount not to exceed $50,000,000 to Forestar Group to enable Forestar Group to repurchase its common stock and to make special dividends to its stockholders, such Distributions pursuant to this clause (i) to be funded from up to sixty-five percent (65%) of the net proceeds from the sales of Multifamily Properties and non-core assets such as the Radisson Hotel in Austin, Texas and any Oil & Gas Properties.”
2.Amendment to §9.1 of the Credit Agreement. Section 9.1(a) of the Credit Agreement, Interest Coverage Ratio, is hereby amended by deleting such subsection in its entirety and substituting the following in lieu thereof:
“(a)    Interest Coverage Ratio. The Loan Parties will not, as of the end of any fiscal quarter of Forestar Group, permit the Interest Coverage Ratio for the fiscal quarter then ended and the immediately preceding three (3) fiscal quarters (treated as a single accounting period) (the “Test Period”), to be less than (i) 2.25:1.0 for the Test Periods ending December 31, 2015 and March 31, 2016, and (ii) 2.50:1.0 for each Test Period ended thereafter.”
3.No other Amendments. The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided or permitted herein, operate as an amendment or waiver of any right, power or remedy of Agent or Lenders under the Credit Agreement or any of the other Loan Documents, nor constitute an amendment or waiver of any provision of the Credit Agreement or any of the other Loan Documents. Except for the amendments expressly set forth above, the text of the Credit Agreement and all other Loan Documents shall remain unchanged and in full force and effect, and Borrower and Guarantors hereby ratify and confirm their respective obligations thereunder, as herein modified and amended. This Amendment shall not constitute a course of dealing with Agent or Lenders at variance with the Credit Agreement or the other Loan Documents such as to require further notice by Agent or Lenders to require strict compliance with the terms of the Credit Agreement and the other Loan Documents in the future.

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4.Conditions of Effectiveness. This Amendment shall become effective as of the date hereof when, and only when, Agent, on behalf of Lenders, shall have received, in form and substance satisfactory to it, the following:
(a)Counterparts of this Amendment duly executed by Borrower, each of the Guarantors and the Required Lenders;
(b)The representations and warranties made pursuant to Section 5 of this Amendment shall be true and correct; and
(c)Payment of all reasonable and documented expenses incurred by Agent in connection with the execution and delivery of this Amendment, together with reasonable fees and actually incurred expenses of Agent’s counsel with respect to this Amendment and other post-closing matters, in each case to the extent invoiced at least one (1) Business Day prior to the date hereof.
5.Representations and Warranties. Each of the Loan Parties represents and warrants as follows:
(a)The execution, delivery and performance by Borrower and each Guarantor of this Amendment are within each such party’s legal powers, have been duly authorized by all necessary shareholder, partner or member action and do not contravene (i) Borrower’s or any such Guarantor’s Organizational Documents, respectively, or (ii) any law or contractual restriction binding on or affecting such Person;
(b)No authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body, except for those already obtained or made and the filing of Security Documents delivered in connection herewith in the appropriate records office with respect thereto, is required for the due execution, delivery and performance by Borrower or any Guarantor of this Amendment;
(c)This Amendment constitutes the legal, valid and binding obligations of each such party, enforceable against such Person in accordance with their respective terms, provided that enforcement may be limited by bankruptcy, insolvency, liquidation, reorganization, reconstruction and other similar laws affecting enforcement of creditor’s rights generally and except to the extent that availability of the remedy of specific performance or injunctive relief is subject to the discretion of the court before which any proceeding therefore may be brought;
(d)All of the representations and warranties of the Loan Parties in the Loan Documents are true and correct in all material respects as of the date hereof (or if such representations and warranties by their terms relate solely to an earlier date, then as of such earlier date); and
(e)No Default or Event of Default is existing and none would result, in each case upon this Amendment becoming effective and after giving effect hereto.
6.Reaffirmation of Guaranty and Security Documents. By execution of this Amendment, each Guarantor reaffirms and restates its guaranty of the Obligations pursuant to the

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Guaranty Agreement and agrees that its obligations thereunder are not released, diminished, impaired or reduced or otherwise adversely affected by this Amendment. Each Loan Party reaffirms and admits the validity and enforceability of each Security Document to which it is a party and all of its obligations thereunder and agrees and admits that (a) it has no defense to any such obligation (as of the date of this Amendment) and (b) it shall not exercise any setoff or offset to any such obligation.
7.Reference to and Effect on the Loan Documents. Upon the effectiveness of this Amendment, on and after the date hereof: each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof” or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to the “Credit Agreement,” “thereunder,” “thereof” or words of like import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as amended and modified hereby.
8.Costs, Expenses and Taxes. Borrower agrees to pay on demand all reasonable and documented out-of-pocket expenses of Agent actually incurred in connection with the preparation, execution and delivery of this Amendment and the other instruments and documents to be delivered hereunder, including, without limitation, the reasonable and documented fees and out-of-pocket expenses of Agent’s counsel with respect thereto and with respect to advising Agent as to its rights and responsibilities hereunder and thereunder.
9.Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflict of laws principles thereof.
10.Loan Document. This Amendment shall be deemed to be a Loan Document for all purposes.
11.Counterparts. This Amendment may be executed by one or more of the parties hereto on any number of separate counterparts, each of which shall be deemed an original and all of which, taken together, shall be deemed to constitute one and the same instrument. Delivery of an executed counterpart of this Amendment by facsimile or other electronic transmission shall be as effective as delivery of a manually executed counterpart hereof.

[The remainder of this page is intentionally left blank.]


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IN WITNESS WHEREOF, the undersigned have duly executed this Amendment as of the date first set forth above.
BORROWER:
FORESTAR (USA) REAL ESTATE GROUP INC., a Delaware corporation
By:
/s/ Charles D. Jehl  
 
Name: Charles D. Jehl
 
Its: Chief Financial Officer
 
 
 
 



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Signature page to First Amendment to Third Amended and Restated Revolving Credit Agreement





GUARANTORS:
FORESTAR GROUP INC., a Delaware corporation
 
By:
/s/ Charles D. Jehl  
 
Name: Charles D. Jehl
 
Title: Chief Financial Officer
 
FORESTAR MINERALS LP, a Delaware limited partnership

By: Forestar Minerals GP, LLC, general partner
 
FORESTAR OIL & GAS LLC, a Delaware limited liability company
 
 
FORESTAR REALTY INC.,
a Delaware corporation
 
 
FORESTAR HOTEL HOLDING COMPANY
INC.
, a Nevada corporation
 
 
CAPITOL OF TEXAS INSURANCE GROUP
INC., a Delaware corporation
 
 
FORESTAR CAPITAL INC., a Delaware corporation
 
 
FORESTAR MINERALS GP LLC, a Delaware limited liability company
 
 
JOHNSTOWN FARMS, LLC,
a Delaware limited liability company
 
 
SAN JACINTO I, LLC,
a Texas limited liability company
 
 
SUSTAINABLE WATER RESOURCES LLC, a Texas limited liability company
 
 
SWR HOLDINGS LLC, a Delaware limited liability company

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Signature page to First Amendment to Third Amended and Restated Revolving Credit Agreement





 
STONEY CREEK PROPERTIES LLC, a Delaware limited liability company
 
 
 
FORCO REAL ESTATE INC.,
a Delaware corporation
 
 
 
FORESTAR PETROLEUM CORPORATION, a Delaware corporation
 
 
 
 
SECO ENERGY CORPORATION,
a Nevada corporation
 
 
 
 
UNITED OIL CORPORATION,
an Oklahoma corporation
 
 
 
 
 
 
 
 
 
 
By:
/s/ Charles D. Jehl
 
 
Name: Charles D. Jehl
 
 
Title: Chief Financial Officer
 
 
 
 
FORESTAR MINERALS HOLDINGS LLC, a Delaware limited liability company
 
 
 
 
By:
/s/ Michael Quinley
 
 
Name: Michael Quinley
 
 
Title: President



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Signature page to First Amendment to Third Amended and Restated Revolving Credit Agreement





 
KEYBANK NATIONAL ASSOCIATION, as a Lender, as Swing Line Lender, and as Agent
 
 
 
 
 
 
 
By:
/s/ Nathan Weyer  
 
Name:
Nathan Weyer
 
Title:
Vice President



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LENDERS:
 
 
 
 
AgFIRST FARM CREDIT BANK, as a lender
 
 
 
 
By:
/s/ Matthew H Jeffords  
 
Name:
Matthew H Jeffords
 
Title:
Vice President












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Signature page to First Amendment to Third Amended and Restated Revolving Credit Agreement





 
NORTHWEST FARM CREDIT SERVICES, PCA, as a lender
 
 
 
 
By:
/s/ Jim Allen  
 
Name:
Jim Allen
 
Title:
SVP Capital Markets










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AMEGY BANK NATIONAL ASSOCIATION, as a lender

 
 
 
 
By:
/s/ Barrett Tondre  
 
Name:
Barrett Tondre
 
Title:
Assistant Vice President




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CAPITAL ONE N.A., as a lender

 
 
 
 
By:
                                        
 
Name:
 
 
Title:
 




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Signature page to First Amendment to Third Amended and Restated Revolving Credit Agreement





 
TEXAS CAPITAL BANK, NATIONAL ASSOCIATION, as a lender

 
 
 
 
By:
/s/ Mike McConnell  
 
Name:
Mike McConnell
 
Title:
Senior Vice President




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GOLDMAN SACHS BANK USA, as a lender

 
 
 
 
By:
/s/ Jerry Li  
 
Name:
Jerry Li
 
Title:
Authorized Signatory




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JPMORGAN CHASE BANK, NATIONAL ASSOCIATION, as a lender

 
 
 
 
By:
/s/ Melissa Burnett
 
Name:
Melissa Burnett

 
Title:
Senior Commercial Banker





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WELLS FARGO BANK, NATIONAL ASSOCIATION, as a lender
 
 
 
 
By:
/s/ Chris M. Garza
 
Name:
Chris M. Garza
 
Title:
Senior Vice President






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Signature page to First Amendment to Third Amended and Restated Revolving Credit Agreement





 
SYNOVUS BANK, as a lender

 
 
 
 
By:
/s/ David W. Bowman
 
Name:
David W. Bowman
 
Title:
Director






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Signature page to First Amendment to Third Amended and Restated Revolving Credit Agreement





 
METROPOLITAN LIFE INSURANCE COMPANY, as a Lender

 
 
 
 
By:
/s/ W. Kirk Duruis
 
Name:
W. Kirk Duruis

 
Title:
Director




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Signature page to First Amendment to Third Amended and Restated Revolving Credit Agreement





 
UNITED FCS, PCA, d/b/a FCS COMMERCIAL
FINANCE GROUP, as a lender

 
 
 
 
By:
/s/ Lisa Caswell
 
Name:
Lisa Caswell
 
Title:
Vice President




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Signature page to First Amendment to Third Amended and Restated Revolving Credit Agreement





 
CADENCE BANK, N.A., as a lender

 
 
 
 
By:
/s/ Melinda N. Jackson
 
Name:
Melinda N. Jackson
 
Title:
Senior Vice President




[END OF SIGNATURES]




Signature page to First Amendment to Third Amended and Restated Revolving Credit Agreement




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