Meritage Corp. completed a $150 million increase to its unsecured revolver and extended the maturity of the facility by 18 months. The company entered into a three-year, $250 million facility last year. At the first anniversary date the company thought it was prudent to increase and bump out the maturity of the facility because of growth plans, according to Larry Seay, v.p. finance and cfo. Meritage plans to increase and extend the facility again next year, Seay said. "We will plan on re-evaluating our needs every year and making changes."
The facility is led by Guaranty Bank and Bank One. Guaranty was the previous lead, while Bank One was elevated from within the syndicate. "We thought they were a good co-agent to have," Seay said. "They were elevated to a strong second position next to Guaranty." Seay said the company has long-term relationships with both lead banks. "They both have a significant homebuilding lending business," he said. Three new lenders, Comerica Bank, PNC Bank and Southtrust Bank joined the syndicate with the new terms. Other lenders include Fleet National Bank, Wells Fargo Bank Arizona, U.S. Bank, California Bank & Trust and Compass Bank.
Pricing on the facility is based on the company's debt-to-equity ratio and ranges from LIBOR plus 11/2-2% generally, Seay said. "We could always get better pricing, but we'll continue to work on that," he added. Meritage designs, builds and sells single-family homes ranging from entry-level to semi-custom luxury. Seay said most public homebuilders have an unsecured facility.