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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): January 31, 2011
Avatar Holdings Inc.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
(State or Other Jurisdiction of Incorporation)
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001-07395
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23-1739078 |
(Commission File Number)
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(I.R.S. Employer Identification No.) |
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201 Alhambra Circle, Coral Gables, Florida
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33134 |
(Address of Principal Executive Offices)
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(Zip Code) |
(305) 442-7000
(Registrants Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c)) |
Item 1.01. Entry Into a Material Definitive Agreement.
On January 31, 2011, Avatar Holdings Inc., a Delaware corporation (the Company), and Avatar
Properties Inc., a Florida corporation (API), entered into an Underwriting Agreement (the
Underwriting Agreement) with Barclays Capital Inc. (the Underwriter). Pursuant to the
Underwriting Agreement, the Company agreed to issue and sell to the Underwriter, and the
Underwriter agreed to purchase for sale in an underwritten public offering, $100 million aggregate
principal amount of 7.50% Senior Convertible Notes due 2016 (the Notes). The Notes were sold to
the Underwriter at 95.75% of the principal amount of the Notes, and were sold to the public at a
purchase price of 100% of the principal amount of the Notes, plus accrued interest, if any, from
February 4, 2011.
The Underwriting Agreement includes customary representations, warranties, conditions to
closing, and covenants. The Underwriting Agreement also provides for customary indemnification by
each of the Company, API and the Underwriter against certain liabilities. The Underwriting
Agreement provides that the Notes are governed by a Base Indenture and Supplemental Indenture (in
each case, as defined below), the principal terms of which are set forth in this report.
A copy of the Underwriting Agreement is attached as Exhibit 1.1 to this report and is
incorporated herein by reference.
On February 4, 2011, the Company completed the sale of the Notes in accordance with the terms
of the Underwriting Agreement. The sale of the Notes is registered pursuant to a Registration
Statement on Form S-3 (No. 333-161498), filed by the Company with the Securities and Exchange
Commission on August 21, 2009 (the Registration Statement). Net proceeds to the Company from the
sale of the Notes is approximately $95,350,000, after deducting the Underwriters discount of 4.25%
and expenses estimated at $400,000. The Company intends to use the proceeds from the sale of the
Notes for general corporate purposes, including, without limitation, the repayment of debt, including the Companys 4.50% Convertible Senior Notes due 2024 (the 4.50% Notes), which notes
may be put to the Company pursuant to the terms thereof on each of April 1, 2011, April 1, 2014,
and April 1, 2019, or called by the Company at any time on or after April 5, 2011, and potential new acquisitions of real estate and real estate-related assets.
As of the date of this report, no acquisitions or investments are probable.
The Notes are a new issuance of securities and there is currently no established market for
the Notes. Accordingly, the Company cannot assure holders as to the development or liquidity of any
market for the Notes.
The Notes are governed by a base indenture (the Base Indenture) and first supplemental
indenture (the Supplemental Indenture, and together with the Base Indenture, the Indenture),
both dated as of February 4, 2011, between the Company and Wilmington Trust FSB, as trustee, and
include the following terms:
Interest: Interest on the Notes is 7.50% per year, payable semi-annually in arrears in cash on
February 15 and August 15 of each year, beginning on August 15, 2011.
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Conversion: Holders may convert Notes into shares of the Companys common stock at any time on
or prior to the close of business on the business day immediately preceding the maturity date. The
Notes are convertible at an initial conversion rate of 33.3333 shares of common stock per $1,000
principal amount of the Notes (equivalent to an initial conversion price of approximately $30.00
per share). The conversion rate, and thus the conversion price, may be adjusted under certain
circumstances, including upon the occurrence of a non-stock change of control as such term is
defined in the Indenture. Upon any conversion, subject to certain exceptions, holders will not
receive any cash payment representing accrued and unpaid interest.
Financial covenants: The Indenture includes the following financial covenants:
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until February 15, 2014, the Company will maintain, at all times, cash and cash
equivalents of not less than $20 million; |
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until the second anniversary of the original issuance date of the Notes, the
Companys total consolidated indebtedness (as indebtedness is defined in the
Indenture) may not exceed $150 million at any time excluding, for purposes of this
covenant, until April 5, 2011, the Companys outstanding 4.50% Notes; |
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until the second anniversary of the original issuance date of the Notes, the
Companys total consolidated indebtedness (as indebtedness is defined in the
Indenture) shall not exceed $50 million at any time, excluding for purposes of this
covenant: (a) the Notes, (b) any indebtedness with a maturity date after February 15,
2014, which indebtedness does not provide the holder with a unilateral put right prior
to February 15, 2014 and (c) until April 5, 2011, amounts outstanding under the
Companys 4.50% Notes. |
Repurchase Right Upon Breach of Financial Covenants: If the Company breaches any of the
financial covenants set forth above, holders will have the right to require the Company to
repurchase, at the repurchase price described below, up to 50% in aggregate principal amount of
the Notes for which holders properly deliver, and do not withdraw, a written repurchase notice. The
repurchase price will be payable in cash and will equal 110% of the principal amount of the Notes
being repurchased, plus accrued and unpaid interest (including additional interest, if any) to, but
excluding, the repurchase date.
Repurchase Right on February 15, 2014: On February 15, 2014, holders will have the right to
require the Company to repurchase, at the repurchase price described below, all or part of the
Notes for which holders properly deliver, and do not withdraw, a written repurchase notice. The
repurchase price will be payable in cash and will equal 100% of the principal amount of the Notes
being repurchased, plus accrued and unpaid interest (including additional interest, if any) to, but
excluding, the repurchase date.
Repurchase Right Upon a Fundamental Change: If a fundamental change to the Company, as such
term is described in the Indenture, occurs at any time before the maturity of the Notes, Holders
will have the right to require the Company to repurchase, at the repurchase
price described below, all or part of the Notes for which holders properly deliver, and do not
withdraw, a written repurchase notice. The repurchase price will be payable in cash and will equal
100% of the principal amount of the Notes being repurchased, plus accrued and unpaid interest
(including additional interest, if any) to, but excluding, the repurchase date.
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Redemption Right: The Company may, at any time on or after February 15, 2014, at its option,
redeem for cash all or any portion of the outstanding Notes, but only if the last reported sale
price of the Companys common stock for 20 or more trading days in a period of 30 consecutive
trading days ending on the trading day before the date the Company provides the notice of
redemption to holders exceeds 130% of the conversion price in effect on each such trading day and
certain other conditions described in the Indenture are met. The redemption price will be payable
in cash and will equal 100% of the principal amount of the Notes being repurchased, plus accrued
and unpaid interest (including additional interest, if any) to, but excluding, the redemption date.
If any event of default, as such events are set forth in the Notes, occurs, the principal
amount of the Notes (or the repurchase price or redemption price, as applicable), plus accrued and
unpaid interest (including additional interest, if any) may be declared immediately due and
payable, subject to certain conditions set forth in the indenture. These amounts automatically
become due and payable in the case of certain types of bankruptcy or insolvency events of default
involving the Company or certain of its subsidiaries.
The breach of any of the financial covenants described above will not constitute an event of
default so long as the Company satisfies its obligations to provide timely notice of such breach
and repurchases all Notes it is required to purchase. If the Company fails to satisfy these
obligations, such failure will constitute an event of default. Following such event of default,
100% of the aggregate principal amount of the Notes will become due and payable at the repurchase
price of 110% of the principal amount of the Notes.
Copies
of the Base Indenture, the Supplemental Indenture, and a Global Note, representing the
Notes, are attached as Exhibits 4.1, 4.2, and 4.3 to this report, and are incorporated herein by
reference.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of the Registrant.
The information in Item 1.01 of this report is incorporated in this Item 2.03 by reference.
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Item 8.01. Other Events.
On February 1, 2011, the Company announced the pricing of the Notes. A copy of the press
release announcing the pricing of the Notes is attached as Exhibit 99.1 to this report and is
incorporated herein by reference.
Filed with this report as Exhibit 5.1 is an opinion of Akerman Senterfitt passing upon the
validity of the issuance of the Notes and the underlying common stock on behalf of the
Company. Included in Exhibit 5.1 and filed with this report as Exhibit 23.1 is a consent of
Akerman Senterfitt consenting to the filing of Akerman Senterfitts opinion as an exhibit
incorporated by reference into the Registration Statement.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
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Exhibit No. |
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Description |
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1.1 |
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Underwriting Agreement, dated January 31, 2011, between Avatar
Holdings Inc., Avatar Properties Inc., and Barclays Capital
Inc. |
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4.1 |
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Indenture between Avatar Holdings Inc. and Wilmington Trust
FSB, as Trustee, dated February 4, 2011. |
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4.2 |
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First Supplemental Indenture between Avatar Holdings Inc. and
Wilmington Trust FSB, dated as of February 4, 2011. |
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4.3 |
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Global Note in the principal sum of $100,000,000, dated
February 4, 2011. |
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5.1 |
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Opinion of Akerman Senterfitt. |
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23.1 |
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Consent of Akerman Senterfitt (included in Exhibit 5.1). |
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99.1 |
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Press Release, dated February 1, 2011. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Date: February 4, 2011 |
Avatar Holdings Inc.
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/s/ Juanita I. Kerrigan
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Name: |
Juanita I. Kerrigan |
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Title: |
Vice President and Secretary |
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Exhibit Index
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Exhibit No. |
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Description |
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1.1 |
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Underwriting Agreement, dated January 31, 2011, between Avatar
Holdings Inc., Avatar Properties Inc., and Barclays Capital
Inc. |
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4.1 |
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Indenture between Avatar Holdings Inc. and Wilmington Trust
FSB, as Trustee, dated February 4, 2011. |
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4.2 |
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First Supplemental Indenture between Avatar Holdings Inc. and
Wilmington Trust FSB, dated as of February 4, 2011. |
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4.3 |
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Global Note in the principal sum of $100,000,000, dated
February 4, 2011. |
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5.1 |
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Opinion of Akerman Senterfitt. |
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23.1 |
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Consent of Akerman Senterfitt (included in Exhibit 5.1). |
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99.1 |
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Press Release, dated February 1, 2011. |
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