15. SUBSEQUENT EVENTS

On May 1, 2018, we closed on our previously announced acquisition of USI, a leading provider of insulation installation and distributions services to the residential and commercial construction markets, in an all-cash transaction valued at $475 million.  The acquisition was funded through net proceeds from the issuance on April 25, 2018 of $400 million of 5.625% Senior Notes due 2026 together with the net proceeds from a $100 million delayed-draw term loan commitment under our Amended Credit Agreement.  These funds were also used for the payment of related fees and expenses, as well as for general corporate purposes.  The acquisition was accounted for as a business combination under ASC 805, “Business Combinations”.  During the subsequent measurement period, we expect to receive additional detailed information to complete the purchase allocation.

A newly-formed wholly owned subsidiary of TopBuild initially issued the Notes on April 25, 2018, and, on May 1, 2018, concurrently with our acquisition of USI, we assumed all of the subsidiary’s obligations under the Senior Notes, and all of our wholly owned subsidiaries guaranteed the Senior Notes on an unsecured senior basis.  The Senior Notes are our senior unsecured obligations and bear interest at 5.625% per annum, which accrues from April 25, 2018, and is payable semiannually in arrears on May 1 and November 1 of each year, beginning on November 1, 2018. The Senior Notes mature on May 1, 2026 unless earlier redeemed or repurchased.

We have the right to redeem the Senior Notes under certain circumstances specified in the indenture governing the  Senior Notes, and, if we undergo a change in control, as specified in the indenture, we must make an offer to repurchase all of the Senior Notes then outstanding at a repurchase price equal to 101% of their principal amount, plus accrued and unpaid interest (if any) to, but not including, the repurchase date.  The indenture contains customary restrictive covenants that, among other things, generally limit our and our subsidiaries’ ability to (i) incur additional debt and issue preferred stock, (ii) create liens, (iii) pay dividends, acquire shares of capital stock, make payments on subordinated debt or make investments, (iv) place limitations on distributions from certain subsidiaries, (v) issue guarantees, (vi) issue or sell the capital stock of certain subsidiaries, (vii) sell assets, (viii) enter into transactions with affiliates and (ix) effect mergers.  The foregoing restrictive covenants are subject to a number of important exceptions and qualifications, as set forth in the indenture.  The indenture additionally contains customary events of default, subject in certain cases to grace and cure periods. Generally, if an event of default occurs and is continuing, the trustee under the indenture or the holders of at least 25% in aggregate principal amount of the Senior Notes then outstanding may declare the principal of, premium, if any, and accrued interest on all the Senior Notes immediately due and payable.

The Senior Notes and related guarantees have not been registered under the Securities Act of 1933, nor are we required to register either the Senior Notes or the guarantees in the future.