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News Release
Notice Regarding the Acquisition of Equity Interests in
Woodside Homes Company, LLC (Inclusion in
Wholly Owned Subsidiaries) and
Change in Specified Subsidiaries
February 22
, 2017 – Sekisui House, Ltd. (“the Company”) announces that it has decided to
make a full-fledged entry into the homebuilding business in the United States and establish an
organization in order to strengthen its business development in the country for the future.
At a meeting of its Board of Directors held on Feb. 22, 2017, the Company resolved to acquire
all equity interests in Woodside Homes Company, LLC which is engaged in the detached house
business in the United States, to carry out reorganization of the Company’s subsidiaries and
second-tier subsidiaries, and to promptly execute the relevant merger agreements. Under the
scheme, SH Residential Holdings, LLC a subsidiary of Sekisui House US Holdings, LLC, which
is a wholly owned subsidiary of the Company, will conduct a merger of Crayon Special Vehicle-I,
LLC, a wholly owned subsidiary of SH Residential Holdings, LLC and Woodside Homes
Company, LLC (through this merger, Woodside Homes Company, LLC will be the surviving
company). After the merger, Woodside Homes Company, LLC will become a wholly owned
subsidiary of SH Residential Holdings, LLC. In addition, NORTH AMERICA SEKISUI HOUSE,
LLC a wholly owned subsidiary of the Company will become a wholly owned subsidiary of
Sekisui House US Holdings, LLC.
With the implementation of the above measures, NORTH AMERICA SEKISUI HOUSE, LLC
will become a subsidiary of Sekisui House US Holdings, LLC after the Company executes
in-kind contribution of all of its equity interests in NORTH AMERICA SEKISUI HOUSE, LLC
to Sekisui House US Holdings, LLC on Feb. 23, 2017 (Feb. 22, 2017, time in US). In addition,
the Company will increase the capital of Sekisui House US Holdings, LLC on Feb. 28, 2017 (Feb.
27, 2017, time in US), in order to partially fund the purchase of Woodside Homes Company,
LLC on Mar. 1, 2017 (Feb. 28, 2017, time in US) and Sekisui House US Holdings, LLC will
increase the capital of SH Residential Holdings, LLC, on that same day.
We would also like to announce that the capital of Sekisui House US Holdings, LLC, SH
Residential Holdings, LLC, and Woodside Homes Company, LLC will be one-tenth of the capital
of the Company
or larger on Feb. 23, 2017, Feb. 28, 2017 and Mar. 1, 2017, respectively, and therefore
these three companies will fall under specified subsidiaries of the Company.
1. Reas
ons for the Acquisition of Equity Interests
The Company has been steadily expanding its business fields and working to achieve further
growth by implementing the Deployment of Growth Strategies Focused on the “Residential”
Business Domain
as set forth
in the mid-term management plan, which ended on January 31,
2017. One of the expanding business domains, the Company has taken steps to fully develop is
the Overseas Business, which began with its entry into the housing market in Australia in 2009.
In the United States, the Company has been engaging in the residential land marketing
business in the suburbs of major cities by developing master plan-type communities and selling
them to American home builders, and in the business for developing, managing and selling
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multi-family rental residence mainly in Los Angeles, Seattle and other urban areas on the West
coast.
In the housing market in the United States, the view that demand for detached houses in the
suburbs will gain speed in the future has a consensus, mainly reflecting falling unemployment
rates, rising wages and the mortgage rates that are still at historically low levels. The Company
views this market as one of the markets that should be the focus of the Company’s efforts in the
Overseas Business. In the domestic market, the Company has been working to develop and
popularize eco-friendly housing systems as its contribution to the solution of social problems
through housing, by supplying its mainstay product, Zero Energy Houses (ZEH), and houses
with rising added-value into the future. As in Japan, interest in and support for sustainable
living environments is rapidly expanding in the United States, as exemplified by the State of
California’s new regulation that requires all newly built detached houses to be ZEH by 2020.
The Company considers this market environment in the United States to be a significant
business opportunity to take advantage of its environmental techniques and to make serious
inroads into the homebuilding business. With this full-scale entry, the Company decided to
cooperate with Woodside Homes Company, LLC, which has been developing business under the
same platform and unified brand in several regions and has established a stable revenue base
over the years. Based on this cooperation, the Company aims to expand business in the State of
Utah where Woodside Homes Company, LLC’s head office is located, the State of California and
other parts of the Western United States.
Woodside Homes Company, LLC has been developing its homebuilding business mainly in the
Western part of the United States. Since its foundation, it has sold a total of more than 40,000
houses and has become one of the largest homebuilders in the region. It has a broad product
lineup in response to the diversity of its customers, and is also marketing eco-friendly housing.
We will expand our business in the United States by leveraging the experience and know-how of
the two companies.
2. Overview of Specified Subsidiaries
(i) Overview of Woodside Homes Company, LLC
(1) Company name Woodside Homes Company, LLC
(2) Location
460 West 50 North, Suite 205, Salt Lake City, Utah 84101,
USA
(3) Representative Joel Shine (Chief Executive Officer)
(4) Business line
Holding company holding equity interests in companies which
engage in the detached housing business and related
businesses.
(5) Capital
US$ 196,163 thousand (as of the end of December 2016,
truncated to nearest whole number)
(6) Date of Establishment June 17, 2009
(7)
Major shareholders and
shareholding ratios
Oaktree AC Invest Co 3, L.P. and certain other accounts
(a total of 4 accounts) 35.7
％
Stonehill Institutional Partners, L.P. 33.4
％
Others (12 accounts) 30.9
％
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(8)
Relationship between
the Company
Capital relationship None
Personnel
relationship
None
Business
relationship
A land purchase and sale agreement
has been made between NORTH
AMERICA SEKISUI HOUSE, LLC, a
U.S. subsidiary of the Company, and
Woodside Homes Company, LLC in
the State of California.
(9)
Operating results and financial position over the last three years
(Unit: US$ in thousands, truncated to nearest whole number)
Fiscal year end December 2013 December 2014 December 2015
Consolidated net assets 201,134
292,445 340,328
Consolidated total assets 478,994
678,041 831,001
Consolidated net sales 441,180
455,273 602,726
Consolidated operating income 46,753
51,161 47,412
Consolidated ordinary income 33,494
51,763 48,015
Net income attributable to
owners of parent
32,061
51,359 47,883
(ii) Overview of Sekisui House US Holdings, LLC
(1) Company name Sekisui House US Holdings, LLC
(2) Location
2001 Jefferson Davis Highway, Suite 701, Arlington, VA22202,
USA
(3) Representative
Fumiyasu Suguro
（
Chairman & Chief Executive Officer
）
(4) Business line Holding company holding equity interests in US subsidiaries
(5) Capital
US$ 1,066,042 thousand (as of the February 23, 2017,
truncated to nearest whole number) (February 22, 2017, time
in US)
(6) Date of Establishment January 31, 2017
(7)
Major shareholders
and
shareholding ratios
Sekisui House, Ltd. 100.0%
(8)
Relationship between
the Company
Capital relationship
Consolidated subsidiary of the
Company.
Personnel
relationship
Fumiyasu Suguro, Director & Senior
Managing Officer of the Company
serves as Chairman & Chief
Executive Officer of Sekisui House
US Holdings, LLC.
Business relationship None
(9)
Operating results and financial position of said
company for the past three years
None
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(10)
Reason for and method
of capital increase
For the purpose of carrying out reorganization of the
Company’s business in the United States with the acquisition
of Woodside Homes Company, LLC, the Company will execute
contribution in-kind of all of its equity interests in NORTH
AMERICA SEKISUI HOUSE, LLC to Sekisui House US
Holdings, LLC.
(iii) Overview of SH Residential Holdings, LLC
(1) Company name SH Residential Holdings, LLC
(2) Location 4790 Eastgate Mall, Suite 150, San Diego, CA 92121, USA
(3) Representative Satoshi Yoshimura (Chairman & Chief Executive Officer)
(4) Business line
Holding company holding equity interests in Woodside Homes
Company, LLC
(5) Capital
US$ 470,000 thousand (as of the February 28, 2017, truncated
to nearest whole number) (February 27, 2017, time in US)
(6) Date of Establishment January 31, 2017
(7)
Major shareholders
and
shareholding ratios
Sekisui House US Holdings, LLC 100.0%
(8)
Relationship between
the Company
Capital relationship The Company owns all equity
interests in Sekisui House US
Holdings, LLC, the parent company
of SH Residential Holdings, LLC.
Personnel
relationship
Two officers / employees of the
Company concurrently serve as
officers of SH Residential Holdings,
LLC.
Business relationship None
(9)
Operating results and financial position of said
company for the past three years
None
(10)
Reason for and method
of capital increase
For the purpose of partially funding the purchase of equity
interests in Woodside Homes Company, LLC, Sekisui House
US Holdings, LLC will increase the capital of SH Residential
Holdings, LLC.
3. Overview of Counterparties from which Equity Interests will be Acquired
The counterparties from which equity interests will be acquired will be Oaktree AC Invest Co
3, L.P. and certain other accounts (a total of 4 accounts.) (“Oaktree”), Stonehill Institutional
Partners, L.P. (“Stonehill”) and other investors (12 accounts). The two primary owners of
Woodside Homes are Oaktree and Stonehill, which are both private equity US investment funds.
Details of these companies are not disclosed at their request. The Company has no special
capital, personnel, or business relationship with any of the counterparties in question.
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4. Number of Equity Interests in Woodside Homes Company, LLC to be Acquired, Acquisition
Value and State of Ownership of Equity Interests Before and After Acquisition by SH
Residential Holdings, LLC
(1)
Number of equity interests
held before transfer
None
(2)
Number of equity interests
to be acquired
21,549,342.22 (Percentage of voting rights held: 100.0%)
(3) Acquisition value
Merger consideration and advisory expenses, etc. (rough
estimate)
Total : US$ 468 million (approx. ¥ 53.3 billion)
The Company has retained Hearthstone as a financial
advisor and Morrison & Foerster LLP as a legal advisor.
(4)
Number of equity interests
held after transfer
21,549,342.22 (Percentage of voting rights held: 100.0%)
(Note) The translation of U.S. dollars amounts into Japanese yen is made at US$ 1 = ¥ 113.81,
effective at January 31, 2017.
5. Schedule
(1)
Date of resolution of the Board of
Directors
February 22, 2017
(2) Date of contract
February 23, 2017 (February 22, 2017, time in US)
(planned)
(3) Date of in-kind contribution
February 23, 2017 (February 22, 2017, time in US)
(planned)
(4) Date of capital increase
February 28, 2017 (February 27, 2017, time in US)
(planned)
(5) Date of execution of the merger
March 1, 2017 (February 28, 2017, time in US)
(planned)
(Note) Date of resolution of the Board of Directors means the date when the Company approved
the resolution at its meeting of the Board of Directors for acquiring the equity interests in
Woodside Homes Company, LLC. Sekisui House US Holdings, LLC, SH Residential Holdings,
LLC, and Woodside Homes Company, LLC will become a specified subsidiary of the Company
on the date of in-kind contribution, on the date of capital increase, on the date of execution of
the merger ,
respectively.
6. Future Outlook
Upon execution of the subject matter, Woodside Homes Company, LLC and other the two
companies are expected to become consolidated subsidiaries of the Company during the current
fiscal year (year ending January 2018). The Company is currently investigating the impact that
the change of the subsidiaries will make on the Company’s consolidated business performance,
and will incorporate the actual amount of such impact into the Company’s earnings forecast as
of the date when it releases the operating results for the year ended on January 31, 2017.
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*** *** ***
For further information, please contact:
Mr. Hitoshi Kuroyanagi
Executive Officer, Chief Manager of Corporate Communications Department
Sekisui House, Ltd.
Email: [email protected]house.co.jp
