Tarragon Obtains Standstill Agreement From Holders of $125 Million of Corporate-Level Unsecured Subordinated Notes
27 Marzo 2008 - 4:43PM
Marketwired
NEW YORK, NY , a leading mixed-use developer with a focus on for
rent and for sale multifamily housing, today announced that it has
obtained a standstill agreement from the holders of its $125
million of corporate-level unsecured subordinated notes, and that
the Company has been granted an option to purchase the subordinated
notes at a discount.
The standstill agreement is effective through September 30, 2009
and includes a related waiver of compliance with the financial
covenants applicable to the subordinated notes during the
standstill period. In addition, Tarragon has been granted a 270-day
option to purchase the subordinated notes from the holders at a
discount, depending on when the option is exercised. The holders of
the subordinated notes granted the waiver and the repurchase option
in exchange, among other things, for the agreement by William S.
Friedman, the Company's Chairman and Chief Executive Officer, and
Robert P. Rothenberg, the Company's President and Chief Operating
Officer, to subordinate approximately $37 million of outstanding
promissory notes owed by Tarragon to the executives to the $125
million of subordinated notes. The executives have also agreed to
limit future cash compensation, including interest payments on
their notes, until the subordinated notes are retired.
In consideration of the executives' agreement to subordinate
their promissory notes and the anticipated benefits to the Company
of the option to repurchase the $125 million of subordinated notes
at a discount, a special committee of independent Tarragon
directors has approved the issuance to the executives of warrants
to purchase an aggregate of 3.5 million shares of Tarragon common
stock. The warrants have a five-year term and an exercise price of
$2.35 per share. In addition, the terms of the executives'
outstanding promissory notes have been amended to provide for an
increase in the annual interest rate payable to 12.5% to reflect
the subordination, with the cash component of such interest capped
at 5% as long as the subordination agreement remains in effect, and
as amended the promissory notes would mature on the later of March
27, 2014 or two years after the $125 million of subordinated notes
have been retired.
Forward-looking Statements
Information in this press release includes "forward-looking
statements" made pursuant of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 that are based on
management's expectations, estimates, projections and assumptions.
Words such as "may," "expects," "anticipates," "intends,"
"estimates," and variations of these words and similar expressions
are intended to identify forward-looking statements, which include
but are not limited to the expectation that the Company will be
able to repurchase the subordinated notes at a discount. Actual
results and the timing of certain events could differ materially
from those projected or contemplated by these forward-looking
statements due to a number of factors, including conditions in the
homebuilding industry and residential real estate and mortgage
markets, business opportunities that may be available to Tarragon,
conditions in the capital and financial markets generally, general
economic conditions, interest rates and other risk factors outlined
in Tarragon's SEC reports, including its Annual Report on Form 10-K
and other SEC reports. Tarragon assumes no responsibility to update
forward-looking information contained in this press release.
About Tarragon Corporation
Tarragon Corporation is a leading developer of multifamily
housing for rent and for sale. Tarragon's operations are
concentrated in the Northeast, Florida, Texas and Tennessee. To
learn more about Tarragon Corporation, visit:
www.tarragoncorp.com.
TARR - G
Contacts: Broadgate Consultants, LLC Alan H. Oshiki (212)
232-2222 Email Contact
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