D.R. Horton, Inc. (NYSE:DHI), a leading home construction company, has revised its investment agreement with real estate developer Forestar Group (NYSE:FOR) Inc., according to an 8-K filing with the Securities and Exchange Commission. The amendment, effective Monday, October 28, 2024, increases the capital expenditure threshold for Forestar's investment decisions from $20 million to $45 million.
Under the original agreement dated June 29, 2017, Forestar's Investment Committee held exclusive authority over transactions involving capital expenditures up to $20 million. Transactions exceeding this amount required written consent from D.R. Horton. The amended and restated shareholder's agreement adjusts these approval thresholds to $45 million.
The new agreement also includes a provision for annual adjustments to the approval threshold, tied to the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index. The threshold will increase based on the one-year percentage change in the index reported for the period ending July 31 each year. Adjustments will be rounded to the nearest $100,000, with no change in years when the index reflects a negative change.
The changes will be subject to approval by Forestar's stockholders at the 2025 Annual Meeting, as part of a proposed amendment to Forestar's Second Amended and Restated Certificate of Incorporation. Until such approval is obtained, the existing charter provisions remain in effect.
D.R. Horton currently owns approximately 62% of Forestar's outstanding common stock. Further details of the arrangements between the two companies were outlined in Forestar's Definitive Proxy Statement filed on December 15, 2023.
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