Debt Obligations

6 Months Ended

Jun. 30, 2013

11. Debt Obligations

Our senior secured term notes and other debt obligations consist of the following:

	June 30,		December 31,
	2013		2012
	(in thousands)

Senior secured term notes due 2017	$	122,936	$	122,729
$10.0 million secured revolving credit facility due 2018	—		—
	$	122,936	$	122,729

In February 2013, we entered into a $10.0 million loan with a bank secured by a first mortgage on a parcel of land and related amenity facilities comprising the Pelican Preserve Town Center (“Town Center”) in Lee County, Florida. The loan is also secured by the rights to certain fees and charges that we are to receive as owner of the Town Center. The loan matures in February 2018. During the initial 36 months, the loan is structured as a revolving credit facility (the “Revolver Phase”), convertible to a term loan for the remaining 24 months (the “Term Phase”). Under the Revolver Phase, we may borrow and repay advances up to $10 million and have the right to issue letters of credit up to an aggregate amount of $5 million outstanding at any given time. The interest rate during the Revolver Phase is a variable rate per annum equal to the Bank’s Prime Rate plus 100 basis points, subject to a floor of 4.0%. The interest rate during the Term Phase is a fixed rate equal to the ask yield of the corresponding U.S. Treasury Bond for a term of five years plus 300 basis points, subject to a minimum rate of 5.0%. During the Revolver Phase, the Company is required to pay an annual renewal fee and a non-use fee equal to 25 basis points based on the average unfunded portion of the loan. There were no amounts drawn on the secured revolving credit facility at June 30, 2013.

In June 2012, we issued $125.0 million in principal amount of senior secured term notes (the “Notes”). The interest rate for the Notes is LIBOR plus 8.0%, subject to a 2.0% LIBOR floor, and is payable monthly in cash. The Notes mature on May 15, 2017, and all or a portion of the outstanding principal balance may be prepaid at any time prior to maturity based on the following prepayment premium schedule:

· Year 1 — 102.0%

· Year 2 — 101.0%

· Year 3 and thereafter — 100.0%

The Notes were issued at a discount price of 98.0% and there was approximately $2.1 million and $2.3 million in unamortized discount at June 30, 2013 and December 31, 2012, respectively. The terms of the Notes permit us to incur additional borrowings of $25.0 - $40.0 million in the form of a secured revolving credit facility and additional term loans in an aggregate amount of $25.0 million. The Notes rank senior to all unsecured debt obligations of the Company and are guaranteed by our subsidiaries, excluding subsidiaries in our real estate services business and our joint ventures.

The Notes contain a requirement to maintain compliance with certain financial covenants which include (i) a minimum amount of shareholder equity, (ii) a minimum amount of liquidity, and (iii) a maximum net debt to total capitalization percentage. As of June 30, 2013, the Company was in compliance with all of these covenants.

In August 2013, we refinanced all of the Notes with a portion of the proceeds from the issuance of $200.0 million in aggregate principal amount of 6.875% senior notes due 2021 (Note 19).

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

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