UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 10, 2004
Manufactured Home Communities, Inc.
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(Exact name of registrant as specified in its charter)
Maryland 1-11718 36-3857664
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Two North Riverside Plaza, Suite 800, Chicago, IL 60606
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (312) 279-1400
Not applicable
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(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On November 10, 2004, we completed the acquisition of an entity that owns 57
properties and approximately 3,000 acres of vacant land, for consideration of
$160 million. In connection with this transaction we entered into a Lease
Agreement with Thousand Trails Operations Holding Company, L.P. ("Lessee").
In addition, on November 10, 2004, in connection with the closing of this
transaction, we entered into a Term Loan Agreement by and among MHC Operating
Limited Partnership, as borrower, Manufactured Home Communities, Inc. and two of
our other affiliates as guarantors, Wells Fargo Bank, N.A., Bank of America,
N.A., Banc of America Securities L.L.C., and LaSalle Bank National Association,
as lenders and various agents.
Further information on this transaction is provided in Item 2.01 and Item 2.03
and is incorporated by reference into this Item.
On November 10, 2004, we also entered into amendments of two existing credit
agreements in order to conform certain financial and other covenants to those of
the term loan and add in one of our affiliates as an additional guarantor, as
follows:
o a Fifth Amended and Restated Credit Agreement (Revolving Facility) by
and among MHC Operating Limited Partnership, as borrower, Manufactured
Home Communities, Inc. and two of our other affiliates as guarantors,
and Wells Fargo Bank, N.A., Bank of America, N.A., and LaSalle Bank
National Association, as lenders and various agents; and
o a First Amended and Restated Loan Agreement by and among MHC Operating
Limited Partnership, as borrower, Manufactured Home Communities, Inc.
and two of our other affiliates as guarantors, and Wells Fargo Bank,
N.A., as lender.
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.
On August 3, 2004, we issued a press release (filed on a Current Report on Form
8-K on August 5, 2004) announcing that we had entered into an Agreement and Plan
of Merger with KTTI Holding Company, Inc. ("KTTI"). On November 10, 2004, we
completed the transaction by acquiring the stock of KTTI and entering into a
leaseback transaction with Lessee. On that date, we issued a press release
announcing the closing of the transaction. The press release is attached to this
Current Report on Form 8-K as Exhibit 99.1 and is incorporated by reference into
this report.
At the time of the acquisition, the only assets owned by KTTI were 57 properties
and approximately 3,000 acres of vacant land located in 16 states, primarily in
the western and southern United States, and British Columbia, Canada. The
consideration for the acquisition was $160 million. The merger agreement
includes customary representations and warranties and covenants.
Prior to closing the acquisition, KTTI spun-off its operating business to
Lessee, a newly-formed entity owned by Kohlberg & Company, L.L.C. ("Kohlberg"),
a private merchant banking firm. Pursuant to the Lease Agreement referenced in
Item 1.01 above we leased the 57 properties (excluding the vacant land) to
Lessee. Lessee is in the business of operating and managing (i) membership
campgrounds, (ii) reciprocal use and affiliation programs for use of campgrounds
and (iii) campgrounds for third parties. The lease provides for annual rental
payments of $16 million, subject to annual increases of 3.25% and payable in
regular monthly installments. In addition to rent, Lessee is responsible for
taxes, insurance and maintenance costs associated with the leased properties
(i.e., "a triple net lease"). The lease contains other customary provisions for
a triple net lease. The initial term of the lease is 15 years, with an option
for Lessee to extend the lease for two consecutive extension terms of 5 years
each. At the end of the lease term, Lessee has the right to
repurchase the 57 properties (excluding the vacant land) from us for the greater
of (x) $160 million or (y) fair market value determined at the time of
repurchase. If Lessee does not exercise its option, we have the option to
purchase the operating business of Lessee for fair market value determined at
the time of purchase. We also have a right of first offer if Lessee desires to
sell its operating business during the lease term. In addition, upon an event of
default and the expiration of any applicable notice and cure periods under the
lease, we have the right at our election to (i) require Lessee to repurchase the
57 properties (excluding the vacant land) for $224 million plus accrued unpaid
rent or (ii) purchase Lessee's operating business for 60% of fair market value
(determined at the time of purchase) less accrued unpaid rent.
The terms of the transaction and consideration paid were the results of
arm's-length negotiations with KTTI. There is no material relationship between
us and KTTI or Kohlberg other than in respect of the transactions described
herein.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN
OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
On November 10, 2004, our affiliate MHC Operating Limited Partnership entered
into the Term Loan Agreement referenced in Item 1.01 above, pursuant to which it
borrowed $120 million, on an unsecured basis, at (i) a floating interest rate
equal to the higher of the prime rate of interest established by the lender and
the Federal Funds Rate announced by the Federal Reserve Bank of New York plus
one-half percent or (ii) LIBOR plus (x) in the case of loans priced by reference
to LIBOR, a margin ranging from 1.10% to 1.75%, and (y) in the case of loans
priced by reference to the base rate, a margin ranging from 0.10% to 0.75%, in
each case depending on the ratio of total liabilities to gross asset values of
MHC Operating Limited Partnership and its subsidiaries. The loan will be due and
payable on November 10, 2007, unless this initial maturity date is extended by
the borrower for an additional two years upon satisfaction of certain
conditions. The term loan agreement contains customary financial covenants,
negative covenants and default provisions. If we do not comply with the various
financial and other covenants and requirements under the term loan agreement,
the lenders may, subject to various customary cure rights, require the immediate
repayment of all outstanding amounts under the term loan agreement. Manufactured
Home Communities, Inc. and two of our other affiliates have provided a guaranty
under this term loan.
We applied the $120 million of proceeds from the term loan along with
approximately $40 million drawn from the First Amended and Restated Loan
Agreement referenced in Item 1.01 above to pay the consideration for the
acquisition of the stock of KTTI.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial statements of the business acquired.
At the time of our acquisition, the only assets owned by KTTI were the 57
properties that are being leased back to Lessee and approximately 3,000 acres of
vacant land. The historical financial statements of KTTI will not be filed
because they relate to the spun-off business which we did not acquire.
(b) Pro forma financial information.
We intend to file any required pro-forma financial information within 71
calendar days after the date that this Current Report on Form 8-K must be filed
with the Securities and Exchange Commission.
(c) Exhibits
The following exhibits are being filed with this Current Report on Form 8-K.
Exhibit No. Description
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1.1 Agreement and Plan of Merger by and among MHC T1000 Trust (f/k/a
MHC Thousand Trails Trust), Thousand Trails Acquisition, Inc.,
KTTI Holding Company, Inc. and Thousand Trails Operations Holding
Company, L.P., dated as of August 2, 2004.
1.2 Amendment No. 1 to Agreement and Plan of Merger by and among MHC
T1000 Trust, Thousand Trails Acquisition, Inc., KTTI Holding
Company, Inc. and Thousand Trails Operations Holding Company,
L.P., dated as of September 30, 2004.
1.3 Amendment No. 2 to Agreement and Plan of Merger by and among MHC
T1000 Trust, Thousand Trails Acquisition, Inc., KTTI Holding
Company, Inc. and Thousand Trails Operations Holding Company,
L.P., dated as of November 9, 2004.
1.4 Lease Agreement, dated as of November 10, 2004, by and between MHC
TT Leasing Company, Inc. and Thousand Trails Operations Holding
Company, L.P.
1.5 Term Loan Agreement, dated as of November 10, 2004, by and among
MHC Operating Limited Partnership, as borrower, Manufactured Home
Communities, Inc., as a guarantor, MHC Trust, as a guarantor, MHC
T1000 Trust, as a guarantor, and the financial institutions party
thereto, as lenders, Wells Fargo Bank, N.A., as administrative
agent and a joint lead arranger, Bank of America, N.A., as
syndication agent, Banc of America Securities L.L.C., as a joint
lead arranger, and LaSalle Bank National Association, as
documentation agent.
1.6 Fifth Amended and Restated Credit Agreement, dated as of November
10, 2004, by and among MHC Operating Limited Partnership, as
borrower, Manufactured Home Communities, Inc., as a guarantor, MHC
Trust, as a guarantor, MHC T1000 Trust, as a guarantor, and the
financial institutions party thereto, as lenders, Wells Fargo
Bank, N.A., as administrative agent, sole lead arranger, swingline
lender and issuing lender, Bank of America, N.A., as syndication
agent, and LaSalle Bank National Association, as documentation
agent.
1.7 First Amended and Restated Loan Agreement, dated as of November
10, 2004, by and among MHC Operating Limited Partnership, as
borrower, Manufactured Home Communities, Inc., as a guarantor, MHC
Trust, as a guarantor, MHC T1000 Trust, as a guarantor, and Wells
Fargo Bank, N.A., as lender.
99.1 Press Release dated November 10, 2004.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MANUFACTURED HOME COMMUNITIES, INC.
Date: November 16, 2004 By: /s/ Michael B. Berman
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Michael B. Berman
Vice President, Treasurer and
Chief Financial Officer
EXHIBIT INDEX
Exhibit No. Exhibit
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1.1 Agreement and Plan of Merger by and among MHC T1000 Trust (f/k/a
MHC Thousand Trails Trust), Thousand Trails Acquisition, Inc.,
KTTI Holding Company, Inc. and Thousand Trails Operations Holding
Company, L.P., dated as of August 2, 2004.
1.2 Amendment No. 1 to Agreement and Plan of Merger by and among MHC
T1000 Trust, Thousand Trails Acquisition, Inc., KTTI Holding
Company, Inc. and Thousand Trails Operations Holding Company,
L.P., dated as of September 30, 2004.
1.3 Amendment No. 2 to Agreement and Plan of Merger by and among MHC
T1000 Trust, Thousand Trails Acquisition, Inc., KTTI Holding
Company, Inc. and Thousand Trails Operations Holding Company,
L.P., dated as of November 9, 2004.
1.4 Lease Agreement, dated as of November 10, 2004, by and between MHC
TT Leasing Company, Inc. and Thousand Trails Operations Holding
Company, L.P.
1.5 Term Loan Agreement, dated as of November 10, 2004, by and among
MHC Operating Limited Partnership, as borrower, Manufactured Home
Communities, Inc., as a guarantor, MHC Trust, as a guarantor, MHC
T1000 Trust, as a guarantor, and the financial institutions party
thereto, as lenders, Wells Fargo Bank, N.A., as administrative
agent and a joint lead arranger, Bank of America, N.A., as
syndication agent, Banc of America Securities L.L.C., as a joint
lead arranger, and LaSalle Bank National Association, as
documentation agent.
1.6 Fifth Amended and Restated Credit Agreement, dated as of November
10, 2004, by and among MHC Operating Limited Partnership, as
borrower, Manufactured Home Communities, Inc., as a guarantor, MHC
Trust, as a guarantor, MHC T1000 Trust, as a guarantor, and the
financial institutions party thereto, as lenders, Wells Fargo
Bank, N.A., as administrative agent, sole lead arranger, swingline
lender and issuing lender, Bank of America, N.A., as syndication
agent, and LaSalle Bank National Association, as documentation
agent.
1.7 First Amended and Restated Loan Agreement, dated as of November
10, 2004, by and among MHC Operating Limited Partnership, as
borrower, Manufactured Home Communities, Inc., as a guarantor, MHC
Trust, as a guarantor, MHC T1000 Trust, as a guarantor, and Wells
Fargo Bank, N.A., as lender.
99.1 Press Release dated November 10, 2004.