Case Studies

Beazer Homes / Trust Preferred Securities

Beazer Homes / Trust Preferred Securities

Debt Restructuring Case Study

Closed January 2010

Client: Beazer Homes, USA (“Beazer”)

Objective: Work with creditors to negotiate restructuring of long term subordinated debt to improve our client’s balance sheet

Process: BAG undertook the following initiatives:

  • Leveraged longstanding relationship with creditors to facilitate dialogue
  • Negotiated option to redeem new / restructured notes beginning on June 1, 2012 at 75% of par value
  • Established interest rate floor of 4.25% and a cap of 9.25% in lieu of Libor plus 2.45% beginning July 30, 2016
  • Per EITF 96-19 (accounting rule for debt extinguishment or modification), resulted in earnings increase of over $50 million

Result: Closed restructuring in January 2010 which increased equity on Beazer’s balance sheet and marked a significant step toward enhancing Beazer’s financial condition and mitigating risk of tripping senior note covenants

Cross Creek Ranch

Cross Creek Ranch

Capital Raise Case Study

Closed April 2012

Client: Johnson Development Corp. (“JDC”)

Objective: Raise for the acquisition and development of Cross Creek Ranch, a 3,200 acre master plan community located in Fulshear, Texas (Houston market)

Process: BAG undertook the following initiatives:

  • Approached network of approximately 30 parties interested in residential land and homebuilding investments
  • Solicited term sheets and selected top candidates
  • Identified Canadian-based Tricon Capital as top selection to provide financial backing for JDC
  • Structured debt and equity waterfall to enable our client to earn outsized returns
  • Negotiated with land seller (Trendmaker Homes, a subsidiary of Weyerhaeuser)
  • Leveraged relationships with Houston-area public and private homebuilders to help underwrite finished lot values and lot sale programs
  • Assisted with due diligence and closing

Result: Closed on land acquisition in April 2012 and immediately took over land development activity and active lot sale programs to select builders.  Johnson subsequently acquired two additional master plan communities with similar financial structure.