AV Homes amends revolver to extend commitments, expand accordion

By Marisa Wong

Morgantown, W.Va., July 28 – AV Homes, Inc. amended its senior revolving credit facility dated April 7, 2014 with JPMorgan Chase Bank, NA as agent to increase the committed amount available from July 28 to June 5, 2017 to $165 million, according to an 8-K filing with the Securities and Exchange Commission.

On June 6, 2017 the total committed amount available under the credit agreement will be $150 million. The extended commitments will expire on July 28, 2019, and any loans outstanding on that date will mature.

The amended credit agreement includes an accordion feature that allows the company to increase the aggregate amount to $200 million, up from $175 million under the existing credit agreement.

The amendment also reduces the committed amount available under the letter-of-credit sub-facility to $50 million.

Consistent with the existing credit agreement, the maximum amount available under the amended agreement is limited to 100% of cash maintained in a borrowing base account and escrowed deposits and funds payable to the company following the sale of real property, plus the following: 85% of the appraised value of the company’s real property that is under contract or under construction and is or is planned to be single-family residential housing units or model homes; plus 65% of the appraised value of the company’s finished lots and lots under development; plus 50% of the appraised value of the company’s entitled lands that are not finished lots or lots under development.

To be included in this borrowing base, the real property must be owned by the company or one of its subsidiaries that guarantees the senior credit facility, and it must be appraised, pledged as collateral and meet some other criteria.

Interest is still equal to Libor plus 325 basis points.

The credit agreement requires that the company comply with the following financial covenants: the leverage ratio may not exceed 60%; if the company’s interest coverage ratio is less than 1.50 to 1.00, the company must deposit to an interest reserve account an amount equal to the interest incurred on all indebtedness during the prior 12 months; and consolidated tangible net worth must be at least $228,881,000 plus 50% of cumulative consolidated net income since Dec. 31, 2015 plus 50% of the net proceeds of any equity offerings.

As of July 28, the amendment date, the following subsidiaries guaranteed the senior credit facility: Avatar Properties Inc., AVH Bethpage, LLC, AVH Carolinas, LLC, AVH EM, LLC, AV Homes of Arizona, LLC, Bonterra Builders, LLC, JCH Group LLC, Royal Oak Homes, LLC and Vitalia at Tradition, LLC.

AV Homes is a Scottsdale, Ariz.-based homebuilder.

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