Beazer Homes moved in to renew a $250 million credit a year before it was set to expire because the company did not want to wait on the market, said David Weiss, cfo. "We didn't want to leave any uncertainty. The market may be difficult by then," he said. As it was, pricing on the Atlanta-based construction company's three-year deal went up 30 basis points, to 13/ 4% over LIBOR.
Weiss said the pricing increase is a reflection of a tougher market and that he wasn't surprised. While the company didn't have trouble securing the extension, Weiss said he knows of other construction companies that have had trouble getting financing. He credits his company's strong balance sheet with helping it to secure financing. "We have a heavy backlog of homes that are sold and need to be constructed," he said. The deal was oversubscribed by $25 million, but the company chose to cut back because it didn't need the additional money. Besides the revolver, Beazer has $200 million in senior notes and a five-year term loan. The senior notes expires in 2010 and are priced at 8 5/8% while the $100 million term loan expires in 2008 and is priced at LIBOR plus 1 3/4 %.
The company chose to stay with original lender BANK ONE. "They've been our lead bank for seven years now, so we have a longstanding relationship with them," he said. "They have knowledge of our industry. There are 10 banks in the syndicate, with Key Bank joining the group with the extension. There are no material changes to the covenants, said Weiss. The company's EBITDA is $160 million, which is up 30% from the previous year.