Forestar Group Inc. Announces Pricing of Convertible Notes

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Forestar Group Inc. Announces Pricing of Convertible Notes

AUSTIN, Texas--(BUSINESS WIRE)-- Forestar Group Inc. (NYS: FOR) (the "Company") today announced the pricing of an underwritten public offering of $110,000,000 aggregate principal amount of its 3.75% Convertible Senior Notes due 2020 (the "Notes"). The underwriters have a 30-day option to purchase up to an additional $15,000,000 aggregate principal amount of Notes from the Company. Settlement of the offering is subject to customary closing conditions and is expected to occur on February 26, 2013.

The Notes will pay interest semiannually at a rate of 3.75% per annum and will mature on March 1, 2020. The Notes will have an initial conversion rate of 40.8351 per $1,000 principal amount (equivalent to a conversion price of approximately $24.49 per share of common stock and a conversion premium of approximately 37.5% based on the closing share price of $17.81 per share of the Company's common stock on February 20, 2013). The initial conversion rate is subject to adjustment upon the occurrence of certain events. Prior to November 1, 2019, the Notes will be convertible only upon certain circumstances, and thereafter will be convertible at any time prior to the close of business on the second scheduled trading day prior to maturity. Upon conversion, holders will receive cash, shares of the Company's common stock or a combination thereof at the Company's election.


The Company intends to use the net proceeds from the offering to repay outstanding borrowings under its revolving line of credit and for general corporate purposes, including investments in oil and gas exploration and drilling and real estate acquisition and development.

Goldman, Sachs & Co. is serving as the sole book-running manager for the offering and KeyBanc Capital Markets Inc., JMP Securities LLC, Capital One Southcoast, Inc., J.P. Morgan Securities LLC and UBS Securities LLC are acting as co-managers.

This press release is being issued pursuant to and in accordance with Rule 134 under the Securities Act of 1933, as amended. The offering of these securities may be made only by means of a prospectus and a related prospectus supplement, forming a part of the effective registration statement, a copy of which may be obtained by contacting: Goldman, Sachs & Co., Prospectus Department, 200 West Street, New York, NY 10282, telephone: (866) 471-2526, facsimile: (212) 902-9316, e-mail: prospectus-ny@ny.email.gs.com.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall there be any sale of these securities, in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful.

About Forestar Group

Forestar Group Inc. operates in three business segments: real estate, mineral resources and fiber resources. At the end of fourth quarter 2012, the real estate segment owns directly or through ventures almost 136,000 acres of real estate located in ten states and fourteen markets in the U.S. The real estate segment has 15 real estate projects representing approximately 26,070 acres currently in the entitlement process, and 74 entitled, developed and under development projects in seven states and eleven markets encompassing almost 14,400 acres, comprised of 23,800 planned residential lots and almost 2,400 commercial acres. The mineral resources segment includes approximately 752,000 net acres of oil and gas mineral interests, with approximately 590,000 acres of fee ownership located principally in Texas, Louisiana, Alabama, and Georgia and about 162,000 net acres of leasehold and overriding royalty interests principally located in Nebraska, Kansas, Oklahoma, North Dakota and Texas. These leasehold interests include almost 6,000 net mineral acres in the core of the prolific Bakken and Three Forks formations. In addition, the mineral resources segment owns a 45% nonparticipating royalty interest in groundwater produced or withdrawn for commercial purposes from approximately 1.4 million acres in Texas, Louisiana, Georgia and Alabama and about 20,000 acres of groundwater leases in central Texas. The fiber resources segment includes the sale of wood fiber and management of our recreational leases.

Forward Looking Statements

This release contains "forward-looking statements" within the meaning of the federal securities laws, including with respect to our planned securities offering and the anticipated use of the net proceeds therefrom. Forward-looking statements are typically identified by words or phrases such as "will," "anticipate," "estimate," "expect," "project," "intend," "plan," "believe," "target," "forecast," and other words and terms of similar meaning. These statements are subject to significant risks and uncertainties, including, without limitation, risks and uncertainties related to economic, market or business conditions and satisfaction of customary closing conditions related to the public offering. No assurance can be given that the securities offering discussed above will be consummated on the terms described or at all. Except as required by law, we expressly disclaim any obligation to publicly revise any forward-looking statements contained in this news release to reflect the occurrence of events after the date of this news release.



Forestar Group Inc.
Anna E. Torma, 512-433-5312

KEYWORDS:   United States  North America  Texas

INDUSTRY KEYWORDS:

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