Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. UCP, Inc. (1572684) 10-Q published on Aug 03, 2017 at 4:04 pm
Reporting Period: Jun 29, 2017
The Company’s operations began in 2004 and principally focused on acquiring land, entitling and developing it for residential construction, and selling residential lots to third-party homebuilders. In 2010, the Company formed Benchmark Communities, LLC, its wholly-owned homebuilding subsidiary, to design, construct and sell high quality single-family homes. On April 10, 2017, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which the Company has agreed to merge with a wholly-owned subsidiary of Century Communities, Inc. (together with its subsidiaries and unless the context otherwise requires, “Century”). In the merger, each outstanding share of the Company’s Class A common stock, par value $0.01 per share (“Class A common stock”), will be converted into the right to receive $5.32 in cash and 0.2309 of a newly issued share of Century common stock, par value $0.01 per share (“Century Common Stock”). The transaction is expected to close during the third quarter of 2017, subject to customary closing conditions, including the adoption of the Merger Agreement by the Company’s stockholders at a special meeting. See Note 13, “Pending Merger with Century” to the accompanying unaudited condensed consolidated financial statements for a further discussion of the merger.
Concurrently with the execution and delivery of the Merger Agreement, on April 10, 2017, Century, a wholly-owned subsidiary of Century, PICO, the Company and UCP, LLC entered into a voting support and transfer restriction agreement (the “Voting Agreement”). Pursuant to the terms of the Voting Agreement, PICO agreed, among other things, to vote all outstanding shares of Class A common stock and Class B common stock, par value $0.01 per share, of the Company currently held or thereafter acquired by PICO (the “PICO Shares”) in favor of the adoption of the Merger Agreement and against any proposal by third parties to acquire the Company, and to take certain other actions in furtherance of the transactions contemplated by the Merger Agreement, including the Exchange (as defined below), in each case subject to the limitations set forth in the Voting Agreement. Among other such limitations, PICO’s obligation to vote in favor of the adoption of the Merger Agreement will be reduced to such number of PICO Shares as is equal to 28% of the aggregate outstanding voting power of the Company if the Board changes its recommendation in respect of an Intervening Event (as defined in the Merger Agreement), and the Voting Agreement automatically terminates if the Merger Agreement is terminated (including if the Company terminates the Merger Agreement to accept a Superior Company Proposal, as defined in the Merger Agreement).
Subject to the terms and conditions set forth in the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each issued and outstanding share of the Company’s Class A common stock (excluding any shares (i) owned by the Company, Century, Merger Sub or any of their respective wholly-owned subsidiaries or (ii) held by any stockholder who properly demands and perfects his, her or its appraisal rights with respect to such shares) will be converted into the right to receive and become exchangeable for (A) $5.32 in cash, without any interest thereon (the “Cash Consideration”) and (B) 0.2309 (the “Stock Exchange Ratio”) of a share of Century Common Stock. No fractional shares of Century Common Stock will be issued in the Merger, and Company stockholders will receive cash in lieu of any fractional shares.
The Merger Agreement contains customary representations and warranties made by each of the Company and Century, and also contains customary pre-closing covenants, including covenants, among others, (i) by the Company to operate its businesses in the ordinary course consistent with past practice and to refrain from taking certain actions without Century’s consent, (ii) by the Company not to solicit, initiate, or knowingly encourage or facilitate and, subject to certain exceptions, not to participate in any discussions or negotiations with, or otherwise knowingly cooperate with, assist, or participate in any effort by, any person (other than Century and Merger Sub) regarding any proposal of an alternative transaction, (iii) by the Company to call and hold a special stockholders meeting and, subject to certain exceptions, require the Board to recommend to the Company’s stockholders that they vote in favor of the adoption of the Merger Agreement and approval of the Merger and (iv) by each of Century, Merger Sub and the Company to use all reasonable efforts to obtain governmental, regulatory and third party approvals.
The Merger Agreement contains certain termination rights for each of the Company and Century, including in the event that (i) the parties mutually agree to termination, (ii) the Merger is not consummated on or before October 15, 2017 (the “Outside Date”), (iii) any law or order permanently prohibits consummation of the Merger, (iv) any condition to the obligation of either party to consummate the Merger becomes incapable of satisfaction before the Outside Date, (v) the requisite approval of the Company’s stockholders is not obtained, (vi) either party is in breach of its respective representations and warranties or covenants under the Merger Agreement such that a closing condition is not satisfied (subject to notice and cure and other customary exceptions), (vii) the Board changes its recommendation to the Company’s stockholders or (viii) the Company enters into an agreement providing for a superior alternative transaction.