AV Homes, Inc. (Nasdaq:AVHI), a developer and builder of active
adult and conventional home communities in Arizona and Florida,
today announced that TPG, a leading global private investment firm,
has agreed to make a $135 million investment in the Company at a
price of $14.65 per share, which represents a 9.6% premium to the
30-day trailing average closing price of AV Homes' common stock. AV
Homes will use the proceeds to accelerate the implementation of its
strategic growth plan in its existing and new high-potential
housing markets. In addition the Company has adopted a shareholder
rights plan effective today designed to protect its net operating
loss assets from the application of Section 382 of the Internal
Revenue Code.
Since 2011, AV Homes has strategically re-engineered the Company
to position it to benefit from the recovery of the homebuilding
industry. It reduced overhead, launched initiatives to improve
internal processes, invested in a new scalable IT platform, and
developed a strategic plan to guide its growth.
Roger A. Cregg, AV Homes' President and Chief Executive Officer,
said the investment will allow the Company to pursue new investment
opportunities in its core markets in line with the Company's
long-term strategy. "We're delighted that a renowned global private
investment firm such as TPG has confidence in our vision, and in
our ability to execute that vision, as the housing industry
continues its recovery. It's an exciting time for AV Homes and I am
confident that the implementation of our plans will drive growth
and deliver long-term value to our shareholders," Cregg said.
AV Homes currently operates in the Phoenix, Arizona and Central
and South Florida markets. The Company's primary operations are
focused on the development of active adult communities designed for
people 55+ through its Vitalia brand, and serving the housing needs
of first-time and move-up homebuyers through its Joseph Carl Homes
brand.
Kelvin Davis, senior partner at TPG, said AV Homes has
established a strong platform for future growth. "AV Homes has
assembled a strong management team with deep industry experience.
The Company is well-positioned to participate in the on-going
recovery of the housing market, with real estate assets located in
two healthy and growing Sunbelt markets," Davis said.
Key Investment Terms
The investment by TPG has been approved by AV Homes' Board of
Directors and it is anticipated that funding will take place by
Thursday, June 20, 2013. The key terms of the investment are as
follows:
- TPG will make a $135 million equity investment in AV Homes at
$14.65 per share, a 9.6% premium to the 30-day trailing average
closing price of AV Homes' common stock.
- At the closing of the transaction, the Company will issue
approximately 2.6 million shares, or approximately $37.5 million,
of common stock, representing approximately 19.9% of the Company's
outstanding common stock, and approximately 0.7 million shares,
with an initial liquidation value of $97.5 million, of newly
created Series A Contingent Convertible Cumulative Redeemable
Preferred Stock (the "Series A Convertible Preferred Stock").
- TPG's ownership in the Company will be approximately 41.9% on
an as-converted basis at the closing of the transaction.
- The Series A Convertible Preferred Stock is convertible on a
ten-for-one basis upon stockholder approval, in accordance with
NASDAQ rules. AV Homes has agreed to hold a meeting of its
stockholders within 90 days following the closing date for
stockholders to vote on the conversion of the preferred stock into
common stock. Two of the Company's largest stockholders, ODAV LLC
and JEN Partners, LLC, representing 24.2% of the outstanding common
stock of the Company, have both disclosed to the Company their
intention to vote in favor of the conversion.
- The Series A Convertible Preferred Stock will accrue increasing
quarterly dividends beginning in six months, if the preferred
shares remain outstanding.
- TPG will have two of eight Board seats at closing, increasing
to four of ten Board seats upon receipt of stockholder approval. In
addition, TPG will have the right to have two directors appointed
to the compensation committee and a newly created finance
committee, both of which will have five members, and will have the
right to have one director appointed to each other Board committee.
TPG's Board and committee representation will decrease in the event
its ownership percentage decreases below certain specified
levels.
- TPG will have consent rights for certain major decisions of the
Company as long as it maintains at least 10% ownership of the
Company's common stock on an as-converted basis and at least 25% of
the common stock it will hold on an as-converted basis at closing
of the transaction.
As noted above, TPG will acquire a 41.9% ownership interest in
the Company following the transaction. Because of the Company's net
operating loss position, it has generated a significant net
operating loss (NOL) carry forward for federal income tax purposes.
The Company's ability to use its NOLs can be negatively impacted if
there is an "ownership change" as defined under Internal Revenue
Code Section 382. In general, this would occur if certain ownership
changes related to the Company's stock that are held by 5% or
greater stockholders exceeds 50% measured over a rolling three year
period. Therefore, the Company has also adopted a shareholder
rights plan effective today that is designed to protect the
Company's valuable NOLs from the application of Section 382, which
can restrict the use of NOLs following a change of ownership. Under
the plan, when a person or group has obtained beneficial ownership
of 4.9% or more of the Company's common stock, or an existing
holder with greater than 4.9% ownership acquires more shares of the
Company's common stock, there would be a triggering event causing
significant dilution in the economic interest and voting power of
such person or group. The Company's Board of Directors, acting
through its newly formed Finance Committee, has the discretion to
exempt an acquisition of common stock from the provisions of the
rights plan. The details of the operation of the rights plan, and
certain exemptions from the rights plan that the Board has approved
with respect to TPG, can be found in the Company's Current Report
on Form 8-K, which the Company expects to file this week.
Conference Call
AV Homes will hold a conference call and webcast on Wednesday,
June 19, 2013 at 4:30 pm (EDT) to discuss this transaction. The
conference call can be accessed live over the telephone by dialing
(877) 643-7158 or for international callers by dialing (914)
495-8565; please dial-in 10 minutes before the start of the call. A
replay will be available on June 19, 2013 at 7:30 pm and can be
accessed by dialing (855) 859-2056 or for international callers by
dialing (404) 537-3406; the conference ID is 98949722. The replay
will be available until June 26, 2013.
In order to access the live webcast, participants may go to the
Investors section of AV Homes website at www.avhomesinc.com and
click on the webcast link that will be made available. A replay
will be available shortly after the original webcast.
Advisors
Moelis & Company LLC is acting as financial advisor to AV
Homes, and Faegre Baker Daniels LLP is acting as legal counsel for
AV Homes in connection with the TPG transaction. Ropes & Gray
LLP is acting as TPG's legal counsel.
About AV Homes
AV Homes, Inc. is engaged in homebuilding, community development
and land sales in Florida and Arizona. Its principal operations are
conducted near Orlando, Florida and in the Phoenix, Arizona
markets. The Company serves active adults 55+ with its Vitalia
brand and also builds communities for people of all ages under its
Joseph Carl Homes brand. AV Homes common shares trade on NASDAQ
under the symbol AVHI. For more information visit
www.avhomesinc.com.
About TPG
TPG is a leading global private investment firm founded in 1992
with $56.7 billion of assets under management and offices in San
Francisco, Fort Worth, Austin, Beijing, Chongqing, Hong Kong,
London, Luxembourg, Melbourne, Moscow, Mumbai, New York, Paris, São
Paulo, Shanghai, Singapore and Tokyo. TPG has extensive experience
with global public and private investments executed through
leveraged buyouts, recapitalizations, spinouts, growth investments,
joint ventures and restructurings. The firm has committed more than
$2 billion of equity to 10 real estate investments since 2009.
TPG's real estate transactions have included ST Residential,
Catellus Development Corporation, Taylor Morrison Home Corporation,
Parkway Properties, Inc., Merin BV, M West Holdings, L.P., Woolgate
Exchange building in the City of London, and the pending
acquisition of Assisted Living Concepts, Inc., among others. For
more information visit www.tpg.com.
Forward-Looking Statements
Certain statements in this press release constitute
"forward-looking statements" within the meaning of the U.S. federal
securities laws, which statements may include information regarding
the plans, intentions, expectations, future financial performance,
or future operating performance of AV Homes, Inc. Forward-looking
statements are based on the expectations, estimates, or projections
of management as of the date of this press release. Although our
management believes these expectations, estimates, or projections
to be reasonable as of the date made, forward-looking statements
are inherently subject to significant business risks, economic and
competitive uncertainties, or other contingencies which could cause
our actual results or performance to differ materially from what
may be expressed or implied in the forward-looking statements.
Important factors that could cause our actual results or
performance to differ materially from our forward-looking
statements include the following: (1) the transaction described in
this press release not be completed, or completed within the
expected timeframe; (2) the costs or difficulties relating to the
transaction may be greater than expected and may adversely affect
our results of operations and financial condition; (3) the expected
benefits of the transaction, including acceleration of the
implementation of our strategic plan, may take longer than
anticipated to achieve and may not be achieved in the entirety or
at all; and (4) the factors set forth in the "Risk Factors" section
of our Annual Report on Form 10-K for the year ended December 31,
2012, our Quarterly Report on Form 10-Q for the quarter ended March
31, 2013 and in our other filings with the Securities and Exchange
Commission (the "SEC"), which filings are available on www.sec.gov.
Readers are cautioned not to place undue reliance on any
forward-looking statements contained herein, which reflect
management's opinions only as of this press release. AV Homes
disclaims any intention or obligation to update or revise any
forward-looking statements to reflect subsequent events and
circumstances, except to the extent required by applicable law.
Additional Information
AV Homes will file a proxy statement in connection with a
special meeting to approve the convertibility of the preferred
stock issued in the transaction. The proxy statement and any other
relevant documents filed with the SEC concerning AV Homes are (or
will be, when filed) available free of charge at http://www.sec.gov
and under the "Financial Information" section of the Investor
Relations page at http://www.avhomesinc.com. Stockholders should
read carefully the proxy statement and the accompanying proxy card
when they become available before making any voting decision.
AV Homes, its directors, and certain of its officers and other
employees are participants in the solicitation of proxies from AV
Homes' stockholders in connection with the special meeting.
Important information concerning the identity and any interests of
these persons will be available on a Schedule 14A that AV Homes
will file with the SEC shortly.
Contacts: Contact for AV Homes:
Ken Plonski
480-214-7408
k.plonski@avhomesinc.com
Contact for TPG:
Lisa Baker
914-725-5949
lisa@blicksilverpr.com
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