NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION
FOR IMMEDIATE RELEASE
4 October 2017
RECOMMENDED MERGER OF
KENNEDY WILSON EUROPE REAL ESTATE PLC
AND
KENNEDY-WILSON HOLDINGS, INC.
ENTRY INTO NEW FINANCING ARRANGEMENTS
On 3 October 2017, Kennedy-Wilson, Inc. (the "Borrower"), a wholly-owned subsidiary of Kennedy-Wilson Holdings, Inc. ("KW"), KW and certain subsidiaries of KW (the "Subsidiary Guarantors") entered into an escrow agreement with a syndicate of lenders (the "Lenders"), Bank of America, N.A., as administrative agent ("BofA") and Merrill Lynch, Pierce, Fenner & Smith Incorporated and JPMorgan Chase Bank, N.A. ("JPM"), as joint lead arrangers and joint bookrunners, pursuant to which the parties delivered executed signature pages to a $700 million unsecured revolving credit and term loan facility (the "A&R Facility"), which is intended to amend and restate the Borrower's existing revolving credit facility. The Borrower's existing revolving credit facility currently has an outstanding balance of $350 million.
The escrow agreement provides that, upon the satisfaction or waiver of the conditions set forth in Article IV of the A&R Facility, including, among other things, the acquisition by KW of all of the shares issued by Kennedy Wilson Europe Real Estate plc ("KWE") not currently owned by KW, pursuant to the terms described in the definitive proxy statement published by KW on 13 September 2017, the signature pages delivered by the Borrower, KW, the Subsidiary Guarantors, the Lenders, BofA and JPM to the A&R Facility will be released from escrow, and the A&R Facility will become effective. Concurrent with the effectiveness of the A&R Facility, the Company will terminate KWE's existing multicurrency revolving credit facility agreement dated August 29, 2014.
The A&R Facility is comprised of a $500 million revolving line of credit and a $200 million term loan facility. Loans under the revolving line of credit bear interest at a rate equal to LIBOR plus between 1.75% and 2.75%, depending on the consolidated leverage ratio as at the applicable measurement date. Loans under the term loan facility bear interest at a rate equal to LIBOR plus between 1.65% and 2.65%, depending on the consolidated leverage ratio as at the applicable measurement date. The A&R Facility has a maturity date of 31 March 2021. Subject to certain conditions precedent and at the Borrower's option, the maturity date of the A&R Facility may be extended by one year.
The A&R Facility contains certain covenants that, among other things, limit KW's and certain of its subsidiaries' ability to incur additional indebtedness, repurchase capital stock or debt, sell assets or subsidiary stock, create or permit liens on assets, engage in transactions with affiliates, enter into sale/leaseback transactions, issue subsidiary equity and enter into consolidations or mergers.
The credit agreement that governs the A&R Facility requires KW to maintain (i) a maximum consolidated leverage ratio (as defined in the credit agreement) of not greater than 65%, measured as at the last day of each financial quarter, (ii) a minimum fixed charge coverage ratio (as defined in the credit agreement) of not less than 1.70 to 1.00, measured as at the last day of each financial quarter for the period of four full financial quarters then ended, (iii) a minimum consolidated tangible net worth equal to or greater than the sum of 70% of consolidated tangible net worth as at the date of the most recent financial statements available as at the effective date of the A&R Facility plus an amount equal to fifty percent (50%) of net equity proceeds received by KW after the date of the most recent financial statements that are available as at the effective date of the A&R Facility, measured as at the last day of each financial quarter, (iv) a maximum recourse leverage ratio (as defined in the credit agreement) of not greater than an amount equal to consolidated tangible net worth as at the measurement date multiplied by 1.5, measured as at the last day of each financial quarter, (v) a maximum secured recourse leverage ratio (as defined in the credit agreement) of not greater than 3.5% of consolidated total asset value and 3.5% of consolidated total asset value as at the effective date of the A&R Facility, measured as at the last day of each financial quarter, (vi) a maximum adjusted secured leverage ratio (as defined in the credit agreement) of not greater than 55%, measured as at the last day of each financial quarter, and (vii) liquidity (as defined in the credit agreement) of at least $75 million. The A&R Facility has customary events of default the occurrence of which may accelerate the outstanding balance under the A&R Facility.
The obligations of the Borrower pursuant to the A&R Facility are guaranteed by KW and the Subsidiary Guarantors.
Unless otherwise defined in this announcement, capitalised terms used but not defined in this announcement have the same meanings given to them in the scheme document published by KWE on 13 September 2017.
Enquiries
Kennedy-Wilson Holdings, Inc
Matt Windisch +1 310 887 6400
Goldman Sachs (lead financial adviser to KW)
Mark Sorrell +44 (0) 20 7774 1000
Chris Emmerson +44 (0) 20 7774 1000
David Friedland +1 212 902 0300
Keith Wetzel +1 310 407 5700
BofA Merrill Lynch (financial adviser to KW)
Geoff Iles +44 (0) 20 7628 1000
Kieran Millar +44 (0) 20 7628 1000
Jeff Horowitz +1 646 855 3213
Cavan Yang +1 646 855 4157
Deutsche Bank (financial adviser to KW)
Drew Goldman +1 212 250 2500
Rishi Bhuchar +44 (0) 20 7545 8000
Brian Mendell +1 212 250 2500
Nancy Davey +1 212 250 2500
Joele Frank (public relations adviser to KW)
Meaghan Repko +1 212 355 4449
Matt Gross +1 212 355 4449
Further information
This announcement is for information purposes only and is not intended to and does not constitute, or form part of, an offer, invitation or the solicitation of an offer or invitation to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities, or the solicitation of any vote or approval in any jurisdiction, pursuant to the Merger or otherwise, nor shall there be any sale, issuance or transfer of securities of KW or KWE in any jurisdiction in contravention of applicable law.
This announcement does not constitute a prospectus or prospectus equivalent document.
Goldman Sachs, which is authorised by the Prudential Regulation Authority and regulated by the FCA and the Prudential Regulation Authority in the UK, is acting exclusively for KW and no one else in connection with the Merger or any other matter referred to in this announcement and will not be responsible to anyone other than KW for providing the protections afforded to clients of Goldman Sachs, or for providing advice in relation to the Merger or any other matters referred to in this announcement.
Merrill Lynch International, which is authorised by the Prudential Regulation Authority and regulated by the FCA and the Prudential Regulation Authority in the UK, and Merrill Lynch, Pierce, Fenner & Smith Incorporated (together with Merrill Lynch International, "BofA Merrill Lynch") are acting exclusively for KW and no one else in connection with the Merger or any other matter referred to in this Announcement and will not be responsible to anyone other than KW for providing the protections afforded to clients of BofA Merrill Lynch, or for providing advice in relation to the Merger or any other matters referred to in this Announcement.
Deutsche Bank AG is authorised under German Banking Law (competent authority: European Central Bank) and, in the UK, by the Prudential Regulation Authority. It is subject to supervision by the European Central Bank and by BaFin, Germany's Federal Financial Supervisory Authority, and is subject to limited regulation in the UK by the Prudential Regulation Authority and Financial Conduct Authority. Details about the extent of its authorisation and regulation by the Prudential Regulation Authority, and regulation by the Financial Conduct Authority, are available on request or from www.db.com/en/content/eu_disclosures.htm.
Deutsche Bank AG, acting through its London branch ("DB London"), and Deutsche Bank Securities Inc. ("DBSI" and, together with DB London, "DB") are acting as financial advisers to KW and no other person in connection with this announcement and its contents. DB will not be responsible to any person other than KW for providing any of the protections afforded to clients of DB, nor for providing any advice, in relation to any matter referred to herein. Without limiting a person's liability for fraud, neither DB nor any of their affiliates nor any of their or their affiliates' respective directors, officers, representatives, employees, advisers or agents shall have any liability to any other person in connection with this announcement and its contents.
Rounding
Certain figures included in this announcement may have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.
No profit forecast
Unless expressly stated otherwise, no statement in this announcement is intended as a profit forecast or profit estimate for any period.
Additional information and where to find it
This announcement may be deemed to be solicitation material in respect of the proposed acquisition of KWE by KW, including the issuance of the New KW Shares in respect of the Merger. On September 13, 2017, in connection with such proposed share issuance, KWH filed a definitive proxy statement on Schedule 14A with the Securities and Exchange Commission (the "SEC") and commenced mailing the definitive proxy statement and a proxy card to each shareholder entitled to vote at the special meeting relating to the proposed acquisition. To the extent KW effects the acquisition of KWE as a scheme of arrangement under Jersey law, the issuance of the New KW Shares in the Merger would not be expected to require registration under the US Securities Act, pursuant to an exemption provided by Section 3(a)(10) of the US Securities Act. In the event that KW determines to effect the Merger pursuant to an Offer or otherwise in a manner that is not exempt from the registration requirements of the US Securities Act, it will file a registration statement with the SEC containing a prospectus with respect to the New KW Shares that would be issued in the Merger. INVESTORS AND SECURITY HOLDERS OF KW ARE URGED TO READ THESE MATERIALS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE MERGER THAT KW WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT KW, THE PROPOSED ISSUANCE OF THE NEW KW SHARES AND THE MERGER. The definitive proxy statement and other relevant materials in connection with the proposed issuance of the New KW Shares and the Merger (when they become available), and, if required, the registration statement/prospectus and other documents filed by KW with the SEC, may be obtained free of charge at the SEC's website at www.sec.gov. In addition, investors and security holders may obtain free copies of the documents filed with the SEC at KW's website, ir.kennedywilson.com, or by contacting KW's Investor Relations department in writing at 151 S. El Camino Drive, Beverly Hills, CA 90212, United States of America.
KW believes that KW, KWE, their respective directors and certain KW executive officers may be deemed to be participants in the solicitation of proxies from KW Shareholders with respect to the Merger, including the proposed issuance of New KW Shares. Information about KW's directors and executive officers and their ownership of KW Shares and KWE Shares or securities referencing KWE Shares is set out in KW's Annual Report on Form 10-K for the financial year ended 31 December 2016, which was filed with the SEC on 27 February 2017, KW's proxy statement for its 2017 Annual Meeting of Stockholders, which was filed with the SEC on 28 April 2017, and KWE's Annual Report for the year ended 31 December 2016, which was filed with the SEC by KW on Form 8-K on 23 March 2017. Information about the directors of KWE is set out in KWE's Annual Report for the year ended 31 December 2016, which was filed with the SEC by KW on Form 8-K on 23 March 2017. Information regarding the identity of the potential participants, and their direct or indirect interests in the solicitation, by security holdings or otherwise, will be set out in the proxy statement and other materials to be filed with the SEC in connection with the Merger and issuance of New KW Shares.
Forward-looking statements
This announcement may contain certain "forward looking statements". These statements are based on current expectations and views of future events and developments and are naturally subject to uncertainty and changes in circumstances. Forward looking statements typically include words such as "believe", "expect", "estimate", "intend", "anticipate" and words of a similar meaning. All statements other than statements of historical facts are forward looking statements. You should not place undue reliance on such forward looking statements, which reflect the current views of the management of KW, are subject to numerous risks and uncertainties and are dependent on many factors, some of which are outside KW's control. There are important factors, risks and uncertainties that may cause actual outcomes and results to be materially different. Except as required by law, KW undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise.
Documents available for inspection
A copy of this announcement will be made available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on KW's website at ir.kennedywilson.com by no later than 12 noon (London time) on 5 October 2017. For the avoidance of doubt, the contents of that website are not incorporated into and do not form part of this announcement.
If you are in any doubt about the contents of this announcement or the action you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor, accountant or independent financial adviser duly authorised under the Financial Services and Markets Act 2000 (as amended) if you are resident in the UK or, if not, from another appropriately authorised independent financial adviser.