What limitations is Corcoran subject to regarding share repurchases?
Corcoran Franchise · 2025 FDDAnswer from 2025 FDD Document
The Company is subject to limitations on share repurchases, which include compliance with the terms of our debt agreements.
The indentures governing the Unsecured Notes contain various negative covenants that limit Anywhere Group's and its restricted subsidiaries' ability to take certain actions, which covenants are subject to a number of important exceptions and qualifications. These covenants include limitations on Anywhere Group's and its restricted subsidiaries' ability to (a) incur or guarantee additional indebtedness, or issue disqualified stock or preferred stock, (b) pay dividends or make distributions to their stockholders, (c) repurchase or redeem capital stock, (d) make investments or acquisitions, (e) incur restrictions on the ability of certain of their subsidiaries to pay dividends or to make other payments to Anywhere Group, (f) enter into transactions with affiliates, (g) create liens, (h) merge or consolidate with other companies or transfer all or substantially all of their assets, (i) transfer or sell assets, including capital stock of subsidiaries and (j) prepay, redeem or repurchase debt that is subordinated in right of payment to the Unsecured Notes.
In particular, under the Unsecured Notes:
- the cumulative credit basket is not available to repurchase shares to the extent the consolidated leverage ratio is equal to or greater than 4.0 to 1.0 on a pro forma basis giving effect to such repurchase;
- the consolidated leverage ratio must be less than 3.0 to 1.0 to use the unlimited general restricted payment basket; and
- a restricted payment basket is available for up to $45 million of dividends per calendar year (with any actual dividends deducted from the available cumulative credit basket).
Source: Item 23 — RECEIPTS (FDD pages 75–276)
What This Means (2025 FDD)
According to Corcoran's 2025 Franchise Disclosure Document, the company faces certain limitations on its ability to repurchase shares of its common stock. These limitations primarily stem from compliance requirements within its debt agreements.
Specifically, the indentures governing the Unsecured Notes contain covenants that restrict Anywhere Group's and its subsidiaries' ability to repurchase or redeem capital stock. These covenants are subject to exceptions and qualifications. The limitations include that the cumulative credit basket is not available to repurchase shares if the consolidated leverage ratio is equal to or greater than 4.0 to 1.0 on a pro forma basis. The consolidated leverage ratio must be less than 3.0 to 1.0 to use the unlimited general restricted payment basket. Additionally, a restricted payment basket is available for up to $45 million of dividends per calendar year, with any actual dividends deducted from the available cumulative credit basket.
These restrictions could impact Corcoran's financial strategies and flexibility. For a prospective franchisee, this indicates that Corcoran's parent company, Anywhere Real Estate Inc., must manage its debt and leverage carefully, which could indirectly affect the resources available for franchise support or growth initiatives. Understanding these limitations is crucial for franchisees as it provides insight into the financial health and strategic options of the parent company.