The New Home Company Inc. Announces Commencement of Exchange Offer and Consent Solicitation

IRVINE, Calif.–(BUSINESS WIRE)– The New Home Company Inc. (the “Company”) announced its commencement of a private exchange offer to certain Eligible Holders (as defined herein) (the “Exchange Offer”) for any and all of the Company’s outstanding 7.250% Senior Notes due 2025 (the “Existing Notes”) for new 8.250% Senior Notes due 2027 (the “Exchange Notes”).

In connection with the Exchange Offer and Consent Solicitation (as defined herein), funds managed by affiliates of Apollo Global Management, Inc. and/or one or more co-investors are expected to make a capital contribution to the Company’s indirect parent in the aggregate amount of $25.0 million in exchange for additional equity in the form of common equity or comparable securities in such parent, the entire proceeds of which are expected to be contributed to the Company in exchange for additional common equity of the Company (the “Equity Contribution”). The Exchange Offer and Consent Solicitation are conditioned on, among other things, the consummation of the Equity Contribution and a condition that holders of at least 75% of the aggregate principal amount of Existing Notes (excluding any Existing Notes held by the Company and its affiliates) participate in the Exchange Offer (the “Minimum Participation Condition”).

In connection with the Exchange Offer and Consent Solicitation, the Company entered into privately negotiated noteholder support agreements with holders of approximately 63% of the Existing Notes, pursuant to which such holders have committed, among other things, to validly tender, and not validly withdraw, all of their Existing Notes at or prior to the Early Tender Date (as defined herein). As a result, we expect to receive the Requisite Consents (as defined herein) prior to the Early Tender Date. Such noteholder support agreements are subject to customary conditions for agreements of this type.

The following table sets forth the Total Consideration and the Exchange Consideration (each as defined herein) for the Exchange Notes:

(1) No representation is made as to the correctness or accuracy of such CUSIP or ISIN numbers.

(2) For each $1,000 principal amount of Existing Notes validly tendered and not validly withdrawn at or prior to the Early Tender Date. On the Settlement Date (as defined herein), the Consent Payment (as defined herein) will be paid to each Eligible Holder that validly tendered and did not validly withdraw Existing Notes at or prior to the Early Tender Date. Eligible Holders who validly tender their Existing Notes after the Early Tender Date will not be eligible to receive the Consent Payment.

(3) Eligible Holders of Existing Notes that are accepted for exchange pursuant to the Exchange Offer will be entitled to receive accrued and unpaid interest in cash on such Existing Notes up to, but excluding, the Settlement Date.

(4) For each $1,000 principal amount of Existing Notes accepted for exchange at or prior to the Expiration Date. On the Settlement Date, any Eligible Holder who validly tendered (and did not validly withdraw) Existing Notes at or prior to the Expiration Date will be eligible to receive the Exchange Consideration (as defined herein).

(5) For each $1,000 principal amount of Existing Notes validly tendered and not validly withdrawn at or prior to the Early Tender Date. On the Settlement Date, the Early Tender Premium (as defined herein) will be paid to each Eligible Holder who validly tendered and did not validly withdraw Existing Notes at or prior to the Early Tender Date. Eligible Holders who validly tender their Existing Notes after the Early Tender Date will not be eligible to receive the Early Tender Premium.

(6) The Exchange Notes will accrue interest at an annual rate of (i) 8.250% for the period beginning with the Settlement Date and ending on October 14, 2025, (ii) 11.000% for the period beginning on October 15, 2025 through October 14, 2026, and (iii) 12.250% for the period beginning on October 15, 2026 to (but excluding) the maturity date of the Exchange Notes.

As part of the Exchange Offer, the Company is soliciting consents (the “Consent Solicitation”) with respect to the Existing Notes, to eliminate substantially all of the restrictive covenants and certain events of default (the “Proposed Amendments”) in the indenture, dated as of October 28, 2020, governing the Existing Notes (as supplemented or otherwise modified prior to the Settlement Date, the “Existing Indenture”). The Proposed Amendments require the consent of the holders of at least a majority of the outstanding principal amount of Existing Notes (excluding Existing Notes owned by the Company or by any holder directly or indirectly controlling or controlled by or under direct or indirect common control with the Company) (the “Requisite Consents”). For each $1,000 principal amount of Existing Notes validly tendered and not validly withdrawn at or prior to 5:00 p.m., New York City time, on June 14, 2023, unless extended (such date and time, as the same may be extended, the “Early Tender Date”), Eligible Holders of Existing Notes will be eligible to receive a consent payment of $20.00 in cash (the “Consent Payment”). On or promptly following the Early Tender Date, if the Company receives the Requisite Consents to effect the Proposed Amendments to the Existing Indenture, the Company and the trustee of the Existing Notes will enter into a supplemental indenture relating to the Proposed Amendments (the “Supplemental Indenture”). The Supplemental Indenture will become effective upon its execution; however, the Proposed Amendments therein will not become operative unless and until Existing Notes representing at least the Requisite Consents are validly tendered and not validly withdrawn and accepted for exchange pursuant to the Exchange Offer on the Settlement Date. The Company intends to announce the receipt of the Requisite Consents and the execution of the Supplemental Indenture by press release. In the event that the Company does not receive the Requisite Consents, the Existing Indenture will remain in effect in its current form. The Company may, though it is not obligated to, complete the Exchange Offer even if the Requisite Consents are not received.

The Exchange Offer and Consent Solicitation are being made pursuant to the terms and subject to the conditions set forth in the offering memorandum and consent solicitation statement, dated May 31, 2023 (the “Offering Memorandum”), and are conditioned upon the consummation of the Equity Contribution, which condition may not be waived by the Company, and certain other conditions (including the Minimum Participation Condition) that may be waived by the Company. The Exchange Offer and Consent Solicitation will expire at 5:00 p.m., New York City time on June 29, 2023, unless extended or terminated (such date and time, as the same may be extended, the “Expiration Date”). Subject to the terms of the Offering Memorandum, we expect the Exchange Offer and Consent Solicitation to settle on the third business day after the Expiration Date (such date, the “Settlement Date”). Subject to applicable law, the Company reserves the right, in its sole discretion, to extend the Early Tender Date, the Expiration Date and/or the Settlement Date for any reason.

For each $1,000 principal amount of Existing Notes validly tendered and not validly withdrawn at or prior to the Early Tender Date, Eligible Holders of Existing Notes will be eligible to receive the total consideration set out in the table above (the “Total Consideration”), which consists of $1,000 principal amount of Exchange Notes (equal to the sum of the Exchange Consideration plus an early tender premium, payable in Exchange Notes, equal to $50 (the “Early Tender Premium”)) plus the Consent Payment. To be eligible to receive the Total Consideration, Eligible Holders must validly tender and not validly withdraw their Existing Notes at or prior to the Early Tender Date.

For each $1,000 principal amount of Existing Notes validly tendered and not validly withdrawn at or prior to the Expiration Date (but after the Early Tender Date), Eligible Holders will only be eligible to receive $950 principal amount of Exchange Notes (the “Exchange Consideration”). Eligible Holders that validly tender their Existing Notes after the Early Tender Date will not be eligible to receive the Consent Payment or the Early Tender Premium.

Tenders of Existing Notes may only be validly withdrawn at any time prior to the Early Tender Date, except in certain limited circumstances where additional withdrawal rights are required by law. Consents to the Proposed Amendments may only be validly revoked by withdrawing the related tendered Existing Notes. Subject to applicable law, the Company may, in its sole discretion, extend the Early Tender Date and/or Expiration Date without extending the date by which tendered Existing Notes may be withdrawn.

Eligible Holders of Existing Notes that are accepted for exchange pursuant to the Exchange Offer will be entitled to receive accrued and unpaid interest in cash on such Existing Notes up to, but excluding, the Settlement Date.

The Exchange Notes will initially be guaranteed by the same entities that guarantee the Existing Notes. The Exchange Notes will rank equally in right of payment with all of the Company’s and its guarantors’ existing and future senior unsecured indebtedness, including indebtedness under the Company’s revolving credit facility and the Existing Notes.

Documents relating to the Exchange Offer and Consent Solicitation will only be distributed to persons who certify that (1) they are (a) a “Qualified Institutional Buyer,” as that term is defined in Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), or (b) a person that is not a U.S. person (as defined in Regulation S under the Securities Act) acquiring Exchange Notes in an offshore transaction, and if they are in the European Economic Area, the United Kingdom or another relevant jurisdiction other than Canada, they are “non-U.S. qualified offerees” (as defined in the Offering Memorandum), and (2) to the extent they are located in a province or territory of Canada, they are “non-U.S. Canadian qualified offerees” (as defined in the Offering Memorandum) (such persons, “Eligible Holders”). The complete terms and conditions of the Exchange Offer and Consent Solicitation are described in the Offering Memorandum, copies of which may be obtained by contacting Global Bondholder Services Corporation (“GBSC”), the exchange agent and information agent for the Exchange Offer and Consent Solicitation, by telephone at (866) 654-2015 (U.S. toll-free) or (212) 430-3774 (banks and brokers), or by email at [email protected]. Holders of Existing Notes wishing to certify that they are Eligible Holders should complete the online eligibility letter located at the following link: https://gbsc-usa.com/eligibility/newhomeco. Once your response has been reviewed and cleared by GBSC, you will receive the Offering Memorandum from GBSC by email.

The Exchange Notes have not been, and will not be, registered under the Securities Act, or any state or foreign securities laws. The Exchange Notes may not be offered or sold in the United States or to any U.S. person except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.

This press release is provided for informational purposes only and does not constitute an offer to sell or purchase, or a solicitation of an offer to sell or purchase, or the solicitation of tenders or consents with respect to, any security. No offer, solicitation, purchase or sale will be made in any jurisdiction in which such an offer, solicitation or sale would be unlawful. The Exchange Offer and Consent Solicitation are being made solely pursuant to the Offering Memorandum and only to such persons and in such jurisdictions as are permitted under applicable law.

About The New Home Company Inc.

New Home Co. is a western regional builder and real estate development company headquartered in Irvine, California. It has divisions within select growth markets in California, Arizona, Colorado, Oregon and Washington.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements contained in this press release other than statements of historical fact, including statements regarding the Exchange Offer, Consent Solicitation and Equity Contribution, are forward-looking statements. These forward-looking statements are frequently accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “goal,” “plan,” “could,” “can,” “seeks,” “might,” “should,” and similar expressions. These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described (and incorporated by reference) in the Offering Memorandum. Those factors, among others, may cause actual results to differ materially from any future results expressed or implied by these forward-looking statements. The forward-looking statements contained in the press release speaks only as of the date of the press release. The Company undertakes no obligation to revise or publicly release any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

John M. Stephens
Investor Relations
949-382-7838
[email protected]

Source: The New Home Company Inc.