Case Study

In 2005, Wachovia needed to put together the largest syndicated loan to a homebuilder in U.S. history—a $2.15 billion loan to D.R. Horton, the country’s largest homebuilder. So the banking giant turned to Womble Carlyle to assist it in putting the deal together.

Jim Lilly and Tricia Snyder of the firm’s Capital Markets Practice Group handled the complex transaction, successfully completing it to the satisfaction of both the bank and the borrower.

SUMMARY: D.R. Horton wanted a more than $2 billion loan to finance homebuilding projects across the country. Wachovia, a long-time Womble Carlyle client, was selected as the principal lender for the facility.

Because of the size of the loan, other lending institutions—38 in all—were brought in to participate in the syndicate of lenders. Womble Carlyle has extensive experience with these types of syndicated loans and that experience led Wachovia to choose Womble Carlyle to handle the transaction.

The sheer scope of the transaction created challenges for Lilly and Snyder. The D.R. Horton loan was larger and far more complex than the typical homebuilder loan. Lilly and Snyder had to coordinate and communicate with all 38 lenders. Another unusual aspect of the case is that Snyder and Lilly had to write the legal opinion for the transaction, a task normally completed by the borrower’s counsel.

RESULT: Wachovia completed a $2.15 billion loan for D.R. Horton—the largest loan syndication ever completed for a homebuilder. In addition, D.R. Horton could qualify for as much as $750 million in additional loans.

Lilly and Snyder began working on the loan in October, 2005; by December, the primary transaction was completed—well within the schedule set forth by the bank and the borrower. In addition, Womble Carlyle completed the deal for less than the firm’s original fee quote.

While Wachovia wanted to negotiate the best possible deal, bank officials also wanted to make sure D.R. Horton, a valued customer of the bank, received excellent service during the loan process. Snyder and Lilly were mindful of those concerns and in the end, reached an agreement that satisfied all parties.

ABOUT THE ATTORNEYS:

Tricia Snyder is a Capital Markets attorney based in Charlotte. Her practice focuses primarily on syndicated lending, in a broad range of industries, including real estate, media, healthcare, consumer products, industrial manufacturing, business and consumer services, and natural resources. Jim Lilly has left the firm.