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Forestar Group Inc. Announces Pricing Of Convertible Notes

Stocks in this article: FOR

Forestar Group Inc. (NYSE: 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.

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