Monday 27 March 2023

US-based special purpose acquisition company DiamondHead Holdings Corp., a Delaware corporation (NASDAQ: DHHC) (NASDAQ: DHHCU) (NASDAQ: DHHCW) has entered into a convertible Note Purchase Agreement valued at USD 75m, with South Carolina-based homebuilder Great Southern Homes, Inc., and a group of investors party to that agreement, the company said.

Pursuant to the Note Purchase Agreement, the Investors have agreed to purchase USD 80m in original principal amount of convertible promissory notes and 744,588 shares of class A common stock in a private placement PIPE investment.

The PIPE investment is in connection with the previously announced business combination pursuant to which the company will acquire GSH, and following which DHHC expects to be renamed United Homes Group, Inc.

As previously announced, on September 10, 2022, DHHC entered into a business combination agreement, by and among the company, GSH and Hestia Merger Sub, Inc., a South Carolina corporation and a wholly-owned subsidiary of DHHC, pursuant to which Merger Sub will merge with and into GSH, with GSH surviving the merger and continuing as a wholly-owned subsidiary of DHHC.

The purpose of the PIPE Investment is to raise additional capital for use by the Issuer following the closing of the Business Combination. The proceeds of the PIPE Investment are expected to be used by DHHC to offset redemptions of class A common stock in connection with the Business Combination, and may be used by DHHC to satisfy the Minimum Cash Condition set forth in the Business Combination Agreement.

The notes mature five years from the date of the business combination, and bear interest at a rate of 15% per annum. The notes are convertible into class A common stock after the first anniversary of the issuance date at 80% of the then current trading price subject to a minimum conversion price of USD5.00 and a maximum conversion price of USD10.00.

Zelman Partners, a subsidiary of Walker & Dunlop (NYSE: WD), served as lead placement agent and Sullivan & Cromwell LLP served as legal advisor to DHHC on the convertible Note Private Placement. BTIG served as capital markets advisor and Nelson Mullins Riley & Scarborough LLP served as legal advisor to GSH.

Zelman Partners also served as exclusive financial advisor and Sullivan & Cromwell LLP served as legal advisor to DHHC on the previously announced merger between DHHC and GSH. BTIG served as exclusive sell-side advisor and Nelson Mullins Riley & Scarborough LLP served as legal advisor to GSH.