Forestar Group Inc. Announces Expiration and Final Results of Tender Offer for Any and All of its 3.850% Senior Notes due 2026

Rhea-AI Summary

Forestar Group (NYSE: FOR) announced the completion of its cash tender offer for its 3.850% Senior Notes due 2026. The tender offer, which expired on March 11, 2025, resulted in tenders of $329,434,000 in aggregate principal amount, representing 82.36% of outstanding Notes. An additional $667,000 remains subject to guaranteed delivery procedures expiring March 13, 2025.

Holders of validly tendered Notes will receive a purchase price of $999.46 per $1,000 principal amount, plus accrued and unpaid interest, with settlement expected on March 14, 2025. The tender offer is contingent on completing a contemporaneous debt financing, with proceeds intended to fund the Note purchases.

Positive

• High tender participation rate of 82.36% indicates strong noteholder acceptance
• Company securing new debt financing to refinance existing notes

Negative

• Company taking on new debt to refinance existing obligations

Insights

Financial Analyst

Forestar's tender offer for its 3.850% Senior Notes due 2026 represents a significant debt restructuring initiative with 82.36% of noteholders tendering their securities. The company has secured tenders for $329,434,000 of the $400 million outstanding notes, with an additional $667,000 potentially coming through guaranteed delivery procedures.

The pricing terms are notable - Forestar is offering $999.46 per $1,000 principal amount, representing a slight discount to par value. This minimal discount suggests the transaction is relatively neutral for both the company and noteholders, indicating market perception of Forestar's debt as appropriately valued.

This tender offer is strategically linked to a new debt financing, suggesting Forestar is effectively refinancing rather than reducing its overall debt burden. For a mid-cap homebuilder with a market capitalization of $1.13 billion, managing $330 million in debt represents a material financial maneuver that affects roughly 29% of the company's market value.

While the press release doesn't disclose the terms of the new financing, this transaction likely aims to optimize Forestar's capital structure through either extending debt maturities, adjusting interest rate exposure, or improving covenant flexibility. This proactive debt management approach is prudent given continuing volatility in interest rates and demonstrates the company's focus on maintaining financial flexibility in the cyclical homebuilding sector.

Forestar's tender offer for its 3.850% Senior Notes has achieved strong acceptance with 82.36% participation ($329.4 million of the outstanding principal), indicating noteholders view the $999.46 per $1,000 pricing as fair. For context, this represents a mere 0.054% discount to par value.

This transaction appears to be a straightforward debt refinancing rather than debt reduction, with the company explicitly stating proceeds from new debt will fund the tender. The high acceptance rate suggests institutional investors are comfortable with Forestar's credit profile and find the terms reasonable.

For a company with $1.13 billion market capitalization, refinancing $330 million in debt (approximately 29% of market value) represents a material financial maneuver. The transaction timing, ahead of the 2026 maturity, demonstrates proactive liability management.

Without details on the new debt terms, we can't determine if this refinancing will reduce interest expense or extend maturity profile. However, the willingness of major financial institutions (JP Morgan, Mizuho, TD Securities, Wells Fargo) to serve as dealer managers signals confidence in Forestar's debt management strategy.

This type of refinancing typically aims to optimize capital structure through extending debt maturities, locking in current rates, or improving covenant flexibility. The near-par pricing suggests a neutral financial impact rather than a distressed situation or significant improvement in terms, making this a routine but substantial refinancing operation.

ARLINGTON, Texas--(BUSINESS WIRE)-- Forestar Group Inc. (NYSE: FOR) announced today the expiration and final results of the previously announced cash tender offer (the “Tender Offer”) to purchase any and all of its outstanding 3.850% Senior Notes due 2026 (the “Notes”) listed in the following table upon the terms and conditions described in the offer to purchase, dated March 5, 2025 (the “Offer to Purchase”), and the related notice of guaranteed delivery, dated March 5, 2025 (the “Notice of Guaranteed Delivery” and, together with the Offer to Purchase, the “Offer Documents”).

Title of Security		CUSIP Numbers / ISINs		Principal Amount Outstanding		Principal Amount Tendered(2)		Percent of Outstanding Principal Amount Tendered(2)
3.850% Senior Notes due 2026(1)		Rule 144A: 346232 AF8 / US346232AF83 Reg. S: U3455L AC8 / USU3455LAC82		$400,000,000		$329,434,000		82.36%

(1)	On or after May 15, 2025, Forestar is entitled to redeem all or a part of the Notes, at a redemption price of 100.000% of the principal amount thereof, plus accrued and unpaid interest, if any, to but excluding the applicable redemption date.
(2)	Not including $667,000 in aggregate principal amount tendered pursuant to the guaranteed delivery procedures, for which delivery of such Notes must be made by 5:00 p.m., New York City time, on March 13, 2025.

The Tender Offer expired at 5:00 p.m., New York City time, on March 11, 2025 (the “Expiration Time”). Tendered Notes may not be withdrawn after the Expiration Time. As of the Expiration Time, Forestar had received tenders for an aggregate principal amount of $329,434,000 of the outstanding Notes, or 82.36% of the aggregate principal amount of the Notes outstanding. These amounts exclude $667,000 aggregate principal amount of the Notes that remain subject to the guaranteed delivery procedures described in the Offer to Purchase. Guaranteed deliveries will expire at 5:00 p.m., New York City time, on March 13, 2025.

Holders of the Notes validly tendered, and not validly withdrawn, and accepted for purchase pursuant to the Tender Offer, will receive the purchase price of $999.46 per $1,000 principal amount of the Notes accepted for purchase (the “Purchase Price”), plus accrued and unpaid interest thereon from the last interest payment date up to, but excluding, the settlement date for all Notes tendered prior to the Expiration Time or pursuant to a Notice of Guaranteed Delivery, which date is currently expected to be March 14, 2025.

There can be no assurance that any Notes will be purchased. The Tender Offer is conditioned upon the satisfaction of certain conditions, including the completion of a contemporaneous debt financing (the “Debt Financing”) by Forestar on terms and conditions (including, but not limited to, the amount of proceeds raised in such financing) satisfactory to Forestar. The Tender Offer is not an offer to sell or a solicitation of an offer to buy any debt instruments or otherwise an invitation to participate in the Debt Financing. The Tender Offer is not conditioned upon any minimum amount of Notes being tendered. The Tender Offer may be amended, extended, terminated or withdrawn. Forestar intends to use a portion of the net proceeds from the Debt Financing to pay the Purchase Price for Notes validly tendered, and not validly withdrawn, and accepted for purchase pursuant to the Tender Offer.

From time to time, subject to applicable law, after completion of the Tender Offer, Forestar or its affiliates may purchase additional Notes in the open market, in privately negotiated transactions, through tender offers, exchange offers, or otherwise, or Forestar may redeem Notes that Forestar is permitted to redeem pursuant to their terms. Any future purchases may be on the same terms or on terms that are more or less favorable to Holders of Notes than the terms of the Tender Offer and could occur as soon as the Expiration Time. Any future purchases by Forestar or its affiliates will depend on various factors existing at that time. There can be no assurance as to which, if any, of these alternatives (or combinations thereof) Forestar or its affiliates may choose to pursue in the future.

Forestar has retained J.P. Morgan Securities LLC, Mizuho Securities USA LLC, TD Securities (USA) LLC, and Wells Fargo Securities, LLC to serve as Dealer Managers for the Tender Offer. Questions regarding the terms of the Tender Offer may be directed to J.P. Morgan Securities LLC, Liability Management Group, at (866) 834-4666 (toll-free) or (212) 834-7489 (collect).

This press release shall not constitute an offer to purchase or the solicitation of an offer to sell the Notes or any other securities, nor shall there be any offer or sale of any Notes or other securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any jurisdiction.

About Forestar Group Inc.

Forestar Group Inc. is a residential lot development company with operations in 62 markets and 24 states. Based in Arlington, Texas, Forestar delivered more than 14,200 residential lots during the twelve-month period ended December 31, 2024. Forestar is a majority-owned subsidiary of D.R. Horton, Inc., the largest homebuilder by volume in the United States since 2002.

Forward-Looking and Cautionary Statements

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Although Forestar believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. All forward-looking statements are based upon information available to Forestar on the date this release was issued. Forestar does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. All statements, other than statements of historical fact, included in this press release regarding, among other things, the expected settlement of the Tender Offer, the Debt Financing and the use of proceeds therefrom and our strategy, plans and objectives of management, are forward-looking statements. When used in this press release, the words “could,” “should,” “will,” “believe,” “anticipate,” “intend,” “estimate,” “expect” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on current expectations, estimates, forecasts and projections as well as the current beliefs and assumptions of management.

Forward-looking statements are subject to a number of risks and uncertainties, many of which involve factors or circumstances that are beyond our control, including, but not limited to, market risks and uncertainties, including those which might affect the Debt Financing or the Tender Offer. Should one or more of these risks or uncertainties occur, or should any underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements. All forward-looking statements, expressed or implied, included in this press release are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250312913496/en/

Chris Hibbetts, 817-769-1860

Vice President of Finance & Investor Relations

InvestorRelations@forestar.com

Source: Forestar Group Inc.

FAQ

What percentage of Forestar's (FOR) 2026 Senior Notes were tendered in the March 2025 offer?

82.36% of the outstanding Notes were tendered, totaling $329,434,000 in aggregate principal amount.

What is the purchase price for Forestar's (FOR) tendered 2026 Senior Notes?

Forestar is offering $999.46 per $1,000 principal amount, plus accrued and unpaid interest.

When is the settlement date for Forestar's (FOR) 2026 Notes tender offer?

The settlement date is expected to be March 14, 2025.

What is the guaranteed delivery deadline for Forestar's (FOR) tender offer?

The guaranteed delivery procedures expire at 5:00 p.m., New York City time, on March 13, 2025.