SEC Form SC 13D filed by DiamondHead Holdings Corp.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934

United Homes Group, Inc. 

(Name of Issuer)

Class A Common Stock, par value $0.0001 per share 

(Title of Class of Securities)

91060H 108

(CUSIP Number)

Clive R.G. O’Grady

90 N Royal Tower Drive

Irmo, South Carolina 29063

Telephone: 844-766-4663 

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

March 30, 2023 

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. ¨

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

(1) The shares reported in this Schedule 13D as beneficially owned by Clive R.G. O’Grady (the “Reporting Person”) were acquired upon the closing of a business combination between Great Southern Homes, Inc. (“GSH”) and DiamondHead Holdings Corp. (“DHHC”; such transaction with GSH, the “Business Combination”) on March 30, 2023 (the “Closing Date”), pursuant to a Business Combination Agreement by and among, DHHC, Hestia Merger Sub, Inc. (“Merger Sub”), and GSH, pursuant to which (i) Merger Sub merged with and into GSH (the “Merger”), (ii) GSH continued as the surviving entity of the Merger and a wholly-owned subsidiary of DHHC, and (iii) DHHC changed its name to United Homes Group, Inc. (the “Issuer”).

(2) Consists of a warrant to purchase 746,947 shares of Class A common stock of the Issuer, par value $0.0001 per share (the “Class A Common Shares”).

(3) Based on 10,621,073 Class A Common Shares issued and outstanding as of March 30, 2023, as reported in the Current Report on Form 8-K filed by the Issuer with the Securities and Exchange Commission on April 5, 2023.

The title and class of equity securities to which this statement on Schedule 13D (“Schedule 13D”) relates are the shares of Class A common stock of the Issuer (defined below), par value $0.0001 per share (the “Class A Common Shares”) of United Homes Group, Inc., a Delaware corporation (the “Issuer”), whose principal executive offices are located at 90 N Royal Tower Drive, Irmo, South Carolina 29063.

Warrant Acquired as Merger Consideration. The warrant to purchase shares of Class A Common Stock reported in this Schedule 13D as beneficially owned by the Reporting Person was acquired by the Reporting Person in connection with the closing of the business combination involving DHHC, Hestia Merger Sub, Inc., a South Carolina corporation and wholly-owned subsidiary of DHHC (“Merger Sub”), and Great Southern Homes, Inc. (“GSH”), pursuant to a Business Combination Agreement between such parties, dated September 10, 2022 (the “Business Combination Agreement”). Upon the closing of the Business Combination (the “Closing”) on March 30, 2023 (the “Closing Date”), in accordance with the Business Combination Agreement, (i) Merger Sub merged with and into GSH (such transaction, the “Merger”), (ii) GSH continued as the surviving entity of the Merger and a wholly-owned subsidiary of DHHC, and (iii) DHHC changed its name to United Homes Group, Inc.

As consideration for the Merger, the stockholders of GSH (the “Pre-Merger Stockholders”) were collectively entitled to receive from DHHC, in the aggregate, a number of shares of DHHC Class A common stock (valued at $10.00 per share) with an aggregate value equal to (a) $500,000,000 minus (b) the Company Closing Indebtedness (as defined in the Business Combination Agreement); plus (c) the Company Closing Cash (as defined in the Business Combination Agreement (as so calculated, the “Merger Consideration”). In addition, and without limitation, each warrant to purchase shares of GSH common stock (each, a “GSH Warrant”) outstanding and unexercised as of immediately prior to the Effective Time (as defined in the Business Combination Agreement was converted into a warrant to acquire a number of Class A Common Shares (“Assumed Warrants”) equal to (x) the number of shares of GSH common stock subject to such GSH Warrants immediately prior to the Effective Time multiplied by (y) the Exchange Ratio (as defined in the Business Combination Agreement), at a strike price per share equal to (A) the strike price per GSH Common Share of such GSH Warrant immediately prior to the Effective Time divided by (B) the Exchange Ratio. Subject to certain exceptions, each Assumed Warrant is subject to the same terms and conditions as were applicable to the GSH Warrant immediately prior to the Effective Time.

Upon the Closing of the Merger, the Reporting Person received Merger Consideration in the form of a warrant to purchase 746,947 shares of Class A Common Stock (the “Warrant”). The Warrant has an exercise price equal to $4.05 per share of Class A Common Stock, and is exercisable as of the date hereof. The Warrant contains other customary terms and conditions.

The summary description in this Schedule 13D of the Business Combination Agreement and the transactions effected thereby, and the Warrant, is qualified in its entirety by reference to the full text of the Business Combination Agreement and the Warrant, copies of which are attached hereto as Exhibits 1 and 2 and are incorporated herein by reference. The terms of the Warrant attached hereto required adjustment as a result of the Business Combination, as reflected in this Item 3.

The GSH Warrant held by the Reporting Person prior to the closing of the Business Combination was acquired with personal funds.

Exclusion of Shares Issuable in Connection with Earnout Rights. As additional consideration for the Merger, the Pre-Merger Stockholders were granted the contingent right (the “Earnout Right”) to receive up to 20,000,000 additional shares of Class A Common Stock (the “Earnout Shares”), to be distributed in up to three payments (each, an “Earnout Share Payment”), if, for 20 out of any 30 consecutive trading days during the period beginning 90 days after the Closing Date and ending on the 5-year anniversary of the Closing Date (the “Earnout Period”), the Issuer’s VWAP (as defined in the Business Combination Agreement) equals or exceeds the following per-share values (each, an “Earnout Target”): (i) $12.50 per share, in which case each Pre-Merger Stockholder will be issued its Earn Out Pro Rata Share (as defined in the Business Combination Agreement) of 7,500,000 Earnout Shares (the “First Earnout Share Payment”); (ii) $15.00 per share, in which case each Pre-Merger Stockholder will be issued its Earn Out Pro Rata Share of 7,500,000 Earnout Shares (the “Second Earnout Share Payment”); and (iii) $17.50 per share, in which case each Pre-Merger Stockholder will be issued its Earn Out Pro Rata Share of 5,000,000 Earnout Shares (the “Third Earnout Share Payment”).

In connection with the Earnout Right granted to the Pre-Merger Stockholders, on the Closing Date of the Merger, the Reporting Person received an Earnout Right to acquire up to 372,350 Earnout Shares (his Earn Out Pro Rata Share of the aggregate maximum of 20,000,000 Earnout Shares issuable to the Pre-Merger Stockholders), (i) 139,631 of which will be issued in connection with the First Earnout Share Payment, (ii) 139,631 of which will be issued in connection with the Second Earnout Share Payment, and (iii) 93,088 of which will be issued in connection with the Third Earnout Share Payment. With respect to the Reporting Person’s Earnout Share potential, each Earnout Share Payment is contingent on the Issuer’s VWAP equaling or exceeding the required Earnout Target for 20 out of any 30 consecutive trading days during the Earnout Period.

The Reporting Person’s right to receive Earnout Shares pursuant to the Earnout Right granted in the Business Combination Agreement became fixed and irrevocable on the Closing Date of the Merger. However, the Earnout Shares underlying the Reporting Person’s Earnout Right are excluded from the shares reported as beneficially owned by the Reporting Person in this Schedule 13D because none of the related Earnout Targets have been satisfied.

The information reported in Item 3 of this Schedule 13D is incorporated by reference into this Item 4. The shares of Class A Common Stock reported as beneficially owned by the Reporting Person were acquired in connection with the Business Combination as Merger Consideration under the Business Combination Agreement and will be held for investment purposes.

The Reporting Person is a Director and the Chief Administrative Officer of the Issuer. Except as set forth herein and to the extent that the Reporting Person may have influence over the corporate activities of the Issuer, including activities that may relate to the items described in subparagraphs (a) through (j) of Item 4 of Schedule 13D, the Reporting Person does not have any present plan or proposal that relate to or would result in any of the matters set forth in subparagraphs (a) through (j) of Item 4 of Schedule 13D.

The Reporting Person reserves the right to increase or decrease his position in the Issuer through, among other things, the purchase or sale of securities of the Issuer on the open market or in private transactions or otherwise, including the exercise of warrants, on such terms and at such times as the Reporting Person may deem advisable. The Reporting Person reserves the right to change his intention with respect to any and all matters referred to in this Item 4.

The responses of the Reporting Person to rows (7) through (13) of the cover pages and Items 2, 3, 4 and 6 of this Schedule 13D are incorporated into this Item 5 by reference.

(a) The aggregate percentage of shares of Class A Common Stock reported as beneficially owned by the Reporting Person is based on the Issuer having 10,621,073 shares of Class A Common Stock issued and outstanding as of the Closing Date.

As of the filing date of this Schedule 13D (the “Filing Date”), the Reporting Person beneficially owns 746,947 shares of Class A Common Stock, representing approximately 6.6% of the issued and outstanding shares of the Issuer’s Class A Common Stock.

(b) As of the Filing Date, the Reporting Person has the sole power to vote or direct the voting of, and to dispose or direct the disposition of, 746,947 shares of Class A Common Stock.

(c) Except as otherwise described in Item 3, Item 6, or elsewhere in this Schedule 13D, no transactions in the shares of Class A Common Stock were effected by the Reporting Person during the past 60 days.

(d) To the knowledge of the Reporting Person, no other person has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, any shares of Class A Common Stock beneficially owned by the Reporting Person.

(e) Not applicable.

The information set forth or incorporated in Items 3 and 4 is hereby incorporated by reference in its entirety into this Item 6.

 After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Dated:   April 10, 2023