The Ryland Group Inc. has closed on a $225 million loan that will help the Westlake Village homebuilder pay off more expensive debt due next year and fuel the company’s growth as new opportunities become available. The note, which company officials said represented “really good terms” at 1.625 percent, is convertible to common stock if and when Ryland’s shares hit $31.22 a share. The company’s shares are trading at around $23 now. Ryland has $823 million in debt right now, said company spokesman Drew Macintosh, but the new debt will be neutral in terms of leverage because cash from the offering will offset existing debt. He said Ryland will use some of the cash to pay off a $167 million note due in 2013 at 6.875 percent. Once Ryland pays off the debt with the less expensive note, he said the company will save $10 million a year. Ryland said the new note is convertible into shares of common stock at a conversion rate of $31.2168 shares of common stock per $1,000 principal amount of notes, corresponding to an initial conversion price of approximately $32.03 per share of common stock. Westlake Village-based Ryland is one of the nation’s largest homebuilders and a leading mortgage-finance company. Since its founding in 1967, Ryland has built more than 295,000 homes and financed more than 245,000 mortgages. The company operates in 17 markets. “These were really good terms for a convertible note with a 1.625 coupon and a premium of only 42 percent to where the stock was trading at the time of the transaction,” Mcintosh said. “We’ll use it for general corporate purposes but we’re looking to grow our business, for new land and new opportunities and this will go a long way toward funding those opportunities.”
