Forestar aims to tap capital markets in 2019 to fund long-term growth

By Devika Patel

Knoxville, Tenn., Dec. 12 – Forestar Group Inc. plans to access the capital markets in fiscal 2019, raising cash for long-term growth, but the company has sufficient liquidity to finance its growth plans for the next two years.

As of Sept. 30, the company had $319 million of unrestricted cash and a $380 million three-year revolver that was negotiated in August.

“We plan to access the capital markets in fiscal 2019 to provide additional capital for long-term growth,” treasurer and chief financial officer Charles D. Jehl said on the company’s investor conference call on Wednesday.

“However, our current liquidity and capital base are sufficient to support our planned growth for both fiscal 2019 and 2020.

“We plan to maintain a flexible financial position and all growth plans and capital raises will be evaluated and adjusted based on economic and capital market conditions,” he said.

The company arranged a new revolver in August.

“As we are building our teams and infrastructure to support our business model, we are also making steady progress in positioning our capital structure to support our growth plans,” Jehl said.

“Earlier this year, we obtained a three-year $380 million unsecured bank credit facility and completed the filing of an equity shelf registration statement, which is now effective,” he said.

Forestar announced the $380 million senior unsecured revolver on Aug. 17.

JPMorgan Chase Bank, NA, Citibank, NA, Mizuho Bank, Ltd. and Wells Fargo Securities, LLC were the joint lead arrangers and joint bookrunners.

The facility has a $190 million accordion that allows the facility to be upsized to $570 million, with additional bank commitments.

The facility includes a letter-of-credit sublimit equal to 50% of the revolving credit commitment, for an initial sublimit of $190 million.

Forestar is a residential and mixed-use real estate development company based in Austin, Texas.

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