As filed with the Securities and Exchange Commission on March 20, 1998.
Registration No. 333-48147
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
Amendment No. 1
to
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
-------------------
THE FORTRESS GROUP, INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 54-1774997
--------------------------------- ------------------------------------
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of incorporation or Organization)
1650 Tysons Boulevard, Suite 600
McLean, Virginia 22102
(703) 442-4545
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
Jamie M. Pirrello
The Fortress Group, Inc.
1650 Tysons Boulevard, Suite 600
McLean, Virginia 22102
(703) 442-4545
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
Jeffrey E. Jordan, Esq.
Arent Fox Kintner Plotkin & Kahn, PLLC
1050 Connecticut Avenue, N.W.
Washington, DC 20036-5339
(202) 857-6473
Approximate date of commencement of proposed sale to the public: As soon as
practicable on or after the effective date of this Registration Statement
-------------------
<PAGE>
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. / /
-------------------
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. /x/
-------------------
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=====================================================================================================================
Proposed Proposed
Amount Maximum Maximum Amount of
Title of Each Class of to be Aggregate Price Aggregate Registration
Securities to be Registered Registered Per Unit(1) Offering Price(1) Fee(2)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Common Stock, $.01 par value 6,366,192 $5.00 $31,830,960 $9,440
=====================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of determining the registration fee
pursuant to Rule 457(c).
(2) Registration fee of $9,145 was paid concurrent with the filing of the Form
S-3 dated March 17, 1998.
================================================================================
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
SUBJECT TO COMPLETION, DATED MARCH 20, 1998
PROSPECTUS
THE FORTRESS GROUP, INC.
6,366,192 Shares of Common Stock
The Common Stock of The Fortress Group, Inc. (the "Company" or
"Fortress"), par value $0.01 per share (the "Common Stock") offered hereby is
held by the Selling Securityholders (as defined herein) who may from time to
time offer for sale such shares of Common Stock. See "Selling Securityholders."
The Company will not receive any proceeds from the sale by the Selling
Securityholders of the Common Stock.
The Common Stock is listed on the Nasdaq National Market under the
symbol "FRTG." On March 19, 1998, the last reported sale price of the Common
Stock reported on the Nasdaq National Market was $5.00 per share. See "Price
Range of Common Stock."
-------------------------------
See "Risk Factors" beginning on page 5 for certain information that
should be considered by prospective investors.
-------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------------
Any or all of the Common Stock offered hereby may be sold from time to
time to purchasers directly by a Selling Securityholder. Alternatively, a
Selling Securityholder may from time to time offer any or all of the Common
Stock to or through underwriters, dealers, brokers or other agents. In addition,
the Selling Securityholders and/or any underwriter, broker, dealer or other
agent may engage in hedging transactions with respect to the Common Stock. In
connection with such transactions, shares of Common Stock offered hereby may be
sold or delivered to cover any short positions resulting from such transactions.
The Company will pay the expenses of this offering estimated at $23,340. The
Common Stock offered hereby may be sold from time to time in one or more
transactions at a fixed offering price, which may be changed, or at varying
prices determined at the time of sale or at negotiated prices. Such prices will
be determined by a Selling Securityholder or by agreement between a Selling
Securityholder and its underwriters, dealers, brokers or other agents.
Any underwriters, dealers, brokers or other agents to or through whom
Common Stock offered hereby is sold may receive compensation in the form of
underwriting discounts, concessions, commissions or fees from a Selling
Securityholder and/or purchasers of Common Stock for whom they may act. In
addition, a Selling Securityholder and any such underwriters, dealers, brokers
or other agents as agent or to whom they may sell as principal, or both (which
compensation to a particular underwriter, broker, dealer or other agent might be
in excess of customary commissions) may be deemed to be underwriters under the
Securities Act, and any profits on the sale of Common Stock by them and any
discounts, commissions or concessions received by any of such persons may be
deemed to be underwriting discounts and commissions under the Securities Act.
Those who act as underwriter, broker, dealer or other agent in connection with
the sale of the Common Stock will be selected by a Selling Securityholder and
may have other business relationships with the Company and its subsidiaries or
affiliates in the ordinary course of business. The Company cannot presently
estimate the amount of any such discounts, commissions or concessions. The
Company knows of no existing arrangements between the Selling Securityholders
and any underwriter, dealer, broker or other agent. See "Plan of Distribution."
The date of this Prospectus is March __, 1998.
================================================================================
<PAGE>
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and, if given or
made, such information or representations must not be relied upon as having been
authorized. This Prospectus does not constitute an offer to sell or the
solicitation of an offer to buy any securities other than the securities to
which it relates or an offer to sell or the solicitation of an offer to buy such
securities in any circumstances in which such offer or solicitation is unlawful.
Neither the delivery of this Prospectus nor any sale made hereunder shall, under
the circumstances, create any implication that there has been no change in the
affairs of the Company since the date hereof or thereof or that the information
contained herein or therein is correct as of any time subsequent to the date of
such information.
TABLE OF CONTENTS
Page
Available Information 2
Documents Incorporated by Reference 3
The Company 4
Risk Factors 5
Price Range of Common Stock 9
Use of Proceeds 9
Selling Securityholders 10
Plan of Distribution 11
Legal Matters 12
Experts 12
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the Exchange Act), and the rules
and regulations promulgated thereunder, and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the Commission). Such reports, proxy statements and other
information filed by the Company with the Commission, including the Registration
Statement on Form S-3 of which this Prospectus is a part, may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional
Offices of the Commission: New York Regional Office, Seven World Trade Center,
New York, New York 10048 and Chicago Regional Office, 500 West Madison Street,
Chicago, Illinois 60661. Copies of such material can also be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Such filings are also available
from the Commission's site on the World Wide Web located at www.sec.gov. The
Common Stock is traded in the over-the-counter market and is quoted in the
Nasdaq National Market. Copies of the Company's reports, proxy statements and
other information filed with the Commission can also be inspected at the offices
of the National Association of Securities Dealers, Inc. at 1735 K Street, N.W.,
Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on
Form S-3 (herein, together with all information incorporated by reference
therein and amendments and exhibits thereto, referred to as the "Registration
Statement") under the Securities Act of 1933, as amended (the Securities Act),
with respect to the securities offered hereby. This Prospectus does not contain
all of the information set forth or incorporated by reference in the
Registration Statement, certain parts of which are omitted as permitted by the
rules and regulations of the Commission. Statements contained in this Prospectus
as to the contents of any contract or other document are not necessarily
complete, and in each instance reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement, each such
statement being qualified in all respects by such reference. For further
information regarding the Company and the securities offered hereby, reference
is made to the Registration Statement.
2
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
The following documents previously filed by the Company with the
Commission (File No. 0-28024) pursuant to the Exchange Act are incorporated
herein by this reference and are made part of this Prospectus:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1996 and as amended by Form 10-K/A;
(2) The Company's Quarterly Reports on Form 10-Q for the quarter ended
March 31, 1997 and on Form 10-Q and Form 10-Q/A for the quarters ended June 30,
1997 and September 30, 1997;
(3) The Company's Current Report on Form 8-K, dated March 17, 1997 and
as amended by Amendment No. 1 dated May 15, 1997;
(4) The Company's Current Report on Form 8-K, dated April 24, 1997;
(5) The Company's Current Report on Form 8-K, dated August 18, 1997 and
as amended by Form 8-K/A dated October 6, 1997;
(6) The Company's Current Report on Form 8-K, dated September 10, 1997
and as amended by Form 8-K/A dated November 10, 1997;
(7) The Company's Current Report on Form 8-K, dated March 16, 1998;
(8) The Company's Proxy Statement dated February 19, 1998;
(9) The Company's Registration Statement on Form 8-A dated March 20,
1996.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this Prospectus and prior to
termination of the offering of the Common Stock shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date any such document is filed. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document which is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon written or oral request, a copy of any and
all of the documents incorporated by reference herein, other than exhibits to
such documents unless such exhibits are specifically incorporated by reference
into such documents. Any such request may be directed to The Fortress Group,
Inc., Attention: Brian S. Buchanan, at the Company's principal executive
offices, which are located at 1650 Tysons Boulevard, Suite 600, McLean, Virginia
22102, telephone number (703) 442-4545.
3
<PAGE>
THE COMPANY
The Fortress Group, Inc. (the "Company" or "Fortress") is a national
homebuilding company engaged in designing, building and selling single family
homes in the metropolitan areas surrounding a diversified group of cities in the
United States. The Company offers high-quality, innovative homes, targeting a
diverse range of market segments including the first-time, entry-level buyer,
move-up buyer and executive/luxury home buyer. The Company markets a wide range
of single family detached and attached homes ranging in size from 1,000 square
feet to 6,000 square feet at prices ranging generally from $70,000 to $800,000.
The Company was formed in June 1995 to create a national homebuilding
company through the simultaneous acquisition of four homebuilding companies and
an initial public offering of the Company's equity and debt securities (the
Offerings). The acquisitions and the Offerings were completed in May 1996. The
acquired companies became wholly-owned subsidiaries of Fortress and as a group
are referred to as the Combined Predecessor Companies or the Founding Builders.
Substantially all of the former owners of the Founding Builders remain as senior
managers of the Company. Each of the Founding Builders continues to be operated
locally under its original name. In 1996, subsequent to closing on the
acquisitions and the Offerings, the Company acquired two additional homebuilding
companies; in 1997, an additional four companies were acquired. The Company has
closed two acquisitions to date in 1998.
The Company's homebuilding operations are currently conducted in the
following market areas:
STATES MARKET AREAS
------ ------------
Arizona Tucson
Colorado Denver, Fort Collins
Florida Jacksonville
Missouri St. Louis
Nevada Las Vegas
North Carolina Raleigh-Durham, Wilmington, Charlotte
Pennsylvania Philadelphia
South Carolina Myrtle Beach, Charleston
Texas Austin, San Antonio
Virginia Loudoun County
Wisconsin Janesville, Madison, Milwaukee
Additionally, the Company has mortgage operations in Colorado, Nevada, North
Carolina, Pennsylvania, South Carolina and Texas.
The Company believes it is positioned for continued success in the
homebuilding industry because of (i) its established operations in attractive
housing markets; (ii) its ability to enhance profitability through an improved
capital structure and certain operating synergies; (iii) its management
expertise both in homebuilding generally and its specific target and geographic
markets; (iv) diversification of its geographic markets and products; (v) its
conservative land acquisition policies; and (vii) its ability to expand both
within its existing markets and through acquiring other local homebuilding
companies located in other strong housing markets.
The Company's principal executive offices are located at 1650 Tysons
Boulevard, Suite 600, McLean, Virginia 22102, and its telephone number at that
address is (703) 442-4545.
4
<PAGE>
RISK FACTORS
Prospective investors should carefully consider, among other factors,
the following:
Competition and Market Factors. The development and sale of residential
property is highly competitive and fragmented. The Company competes for
residential sales with national, regional and local developers and homebuilders,
resales of existing homes and, to a lesser extent, condominiums and available
rental housing. The Company's competitors include a number of large national and
regional homebuilding companies and small local homebuilding companies, some of
which may have greater financial resources, easier access to capital markets
and/or lower costs than the Company. Competition among both small and large
residential homebuilders is based on a number of interrelated factors, including
location, reputation, amenities, design, quality and price.
The homebuilding industry is cyclical and affected by consumer
confidence levels, prevailing economic conditions in general and by job
availability and interest rate levels in particular. A variety of other factors
affect the homebuilding industry and demand for new homes, including changes in
costs associated with home ownership such as increases in property taxes and
energy costs, changes in consumer preferences, demographic trends and the
availability of and changes in mortgage financing programs. In addition,
homebuilders are subject to various risks often outside of their control,
including weather conditions and natural disasters, construction delays, cost
overruns, changes in governmental regulations, as well as availability and price
fluctuations of land, labor and raw materials.
The homebuilding industry is also subject to the potential for
significant variability and fluctuations in real estate values. Although the
Company believes the real estate assets currently reflected on the Company
balance sheet are reasonable in amount given the size of the Company's business
and are reflected at or below their fair value, no assurances can be given that
write-downs to the net realizable value of some or all of the Company's assets
will not occur if market conditions deteriorate, or that such write-downs,
should they occur, will not be material in amount.
Government Regulations and Environmental Controls. The Company is
subject to a variety of Federal, state and local statutes, ordinances, rules and
regulations concerning protection of health and the environment. These laws may
result in delays, cause the Company to incur substantial compliance costs and
prohibit or severely restrict development in certain environmentally sensitive
regions or areas. Prior to purchasing a parcel of land, the Company's local
management evaluates such land for the presence of hazardous or toxic materials,
wastes or substances. The Company generally engages independent environmental
engineers to complete such an evaluation. The Company has not been materially
adversely affected to date by the presence or potential presence of such
materials. However, no assurance can be given that such a material adverse
affect will not occur in the future.
Whether Fortress controls entitled or unentitled land, certain building
and other permits, as well as approvals, are required to complete all
residential developments. The ability of the Company to obtain necessary
approvals and permits for its planned communities is often beyond the Company's
control and could restrict or prevent the development of otherwise desirable
property. The length of time necessary to obtain permits and approvals increases
the carrying costs of unimproved land acquired for the purpose of development
and construction. In addition, the continued effectiveness of permits already
granted is subject to factors such as changes in policies, rules and regulations
and their interpretation and application.
5
<PAGE>
Interest Rates; Mortgage Financing. Virtually all purchasers of the
Company's homes finance their acquisitions through third-party lenders providing
mortgage financing. In general, housing demand is adversely affected by
increases in interest rates, unavailability of mortgage financing, increasing
housing costs and unemployment levels. If mortgage interest rates increase and
the ability of prospective buyers to finance home purchases is adversely
affected, the Company's sales, gross margins and net income and the market price
of the common stock may be adversely impacted. The Company's homebuilding
activities are also dependent upon the availability and cost of mortgage
financing for buyers of homes owned by potential customers so those customers
("move-up buyers") can sell their homes and purchase a home from the Company. In
addition, the Company believes that the availability of FHA and VA mortgage
financing is an important factor in marketing a number of its homes. Any
limitation or restriction on the availability of such financing could adversely
affect the Company's sales. Furthermore, changes in Federal income tax laws may
affect demand for new homes. Recently, proposals have been publicly discussed to
eliminate or limit the deductibility of mortgage interest for Federal income tax
purposes and to eliminate or limit tax-free rollover treatment provided under
current law where proceeds of the sale of a principal residence are reinvested
in a new principal residence. Enactment of such proposals may have an adverse
effect on the homebuilding industry in general, and demand for the Company's
products in particular. No prediction can be made as to whether any such
proposals will be enacted and, if enacted, the particular form such laws would
take.
Uncertainties Regarding Acquisitions. The Company expects to use the
net proceeds from the transactions (the Transactions) contemplated by the
Amended and Restated Stock Purchase Agreement dated as of September 30, 1997, as
amended (the Stock Purchase Agreement) between the Company and Prometheus
Homebuilders LLC (Prometheus), an affiliate of Lazard Freres Real Estate
Investors, LLC (Lazard) primarily for the selective acquisition of established
homebuilding companies. In evaluating potential acquisitions of homebuilders,
the Company seeks transactions in which the financial results of the acquired
company are expected to be accretive to the Company's earnings per share and
financial ratios, on an historical pro forma basis and on a prospective basis.
There can be no assurance that the Company will be able to make additional
acquisitions of homebuilders which meet the Company's acquisition criteria or
that additional acquisitions, or other uses of the net proceeds, will have a
positive impact on the Company's earnings. Also, there can be no assurance that
income from the acquisitions of additional homebuilders will exceed the cost to
the Company of the securities issued by the Company under the Transactions.
Thus, it is possible that the potential benefits to the Company and the
stockholders from the Transactions may not be realized and that the Company's
financial condition and results may not improve by using the net proceeds.
Dilution. Under the Transactions, the Company has issued $40,000,000
initial liquidation value (40,000 shares) of Class AA Preferred Stock and
Warrants for 375,000 shares of Common Stock and will issue $35,000,000 initial
liquidation value (35,000 shares) of Class AB Preferred Stock, Warrants for
625,000 shares of Common Stock and Contingent Warrants which potentially provide
for the issuance of between 380,952 and 5,714,286 shares of Common Stock. The
Class AA Preferred Stock is convertible at the option of the holder into Common
Stock at any time after issuance. The initial conversion price of $6.00 per
share for the Class AA Preferred Stock is subject to decrease, at the option of
the holder, between September 30, 2001 and September 30, 2003 if the average
closing price of the Common Stock for the 60 days prior to such adjustment is
$12.00 or less and the amount of adjustment will vary based on the average
closing price of the Common Stock. The Class AB Preferred Stock will be
convertible at the option of the holder into Common Stock on or after September
30, 2001. The conversion price will be equal to 95% of the average of the
closing prices of the Common Stock for the 30 trading days commencing 45 trading
days before the applicable conversion date. The Warrants will be exercisable
between September 30, 1999 and September 30, 2004, at an exercise price of $7.00
per share of Common Stock, subject to adjustment. Between September 30, 2001 and
September 30, 2003, the exercise price of the Warrants is subject to decrease,
at the option of the holder, if the average closing price of the Common Stock is
$12.00 per share or less for the 60 preceding days, and the number of shares of
Common Stock into which the Warrants will convert upon exercise of the Warrants,
is subject to increase if the average closing price of the Common Stock is
$20.00 per share or less for the 60 preceding days. The Contingent Warrants
would be exercisable at an exercise price of $.01 per share if between September
30, 2001 and September 30, 2003, the Adjustment Price (the average closing price
of the Common Stock for 60 days preceding an election by the holder of the Class
AA Preferred Stock to adjust the optional conversion price of such stock) is
between $5.00 and $10.00 per share.
6
<PAGE>
The Class AA Preferred Stock has been and the Class AB Preferred Stock will
be accounted for as equity when issued, net of the pro rata share of allocable
issuance costs. Additionally, the five percent discount conversion feature of
the Class AB Preferred Stock must be recognized for accounting purposes upon
issuance of the Class AB Preferred Stock. This discount will be based on the
market price of the Common Stock when the Class AB Preferred Stock is issued and
will be amortized over the period from the issuance to the date that the
security is first convertible, September 30, 2001. Based upon the current market
price of the Common Stock and the current weighted average shares outstanding,
if all of the Class AB Common Stock had been issued at the Second Closing, the
impact would be an annual decrease in earnings per share of approximately $.04
per share through the year 2001. The issuance and conversion of the Class AA
Preferred Stock and the Class AB Preferred Stock, the issuance and exercise of
the Warrants, including the potential adjustments to increase the number of
shares issuable upon exercise and to decrease the exercise price, and the
issuance and exercise of the Contingent Warrants, which potentially provide for
the issuance of between 380,952 and 5,714,286 shares of Common Stock at an
exercise price of $.01 per share, could have the effect of further materially
reducing the Company's earnings per share and diluting the economic interest of
the Company's existing stockholders.
The holders of Class AA Preferred Stock and Class AB Preferred Stock,
voting as a single class, will have the exclusive right to elect three Preferred
Stock Directors of a 15-member Board. A proportionate number of the Preferred
Stock Directors will serve on each committee of the Board, except for the
Executive Committee. the Executive Committee, which will have substantial
operational authority, will consist of five member of which two will be
Preferred Stock Directors. After the Second Closing, upon the occurrence of an
Adverse Event (as defined), the holders of Class AA Preferred Stock and Class AB
Preferred Stock, voting as a single class, will be entitled to elect additional
Preferred Stock Directors sufficient to constitute a majority of the Board and
all committees of the Board. In addition, holders of Class AA Preferred Stock
and Class AB Preferred Stock will be entitled to vote on all matters voted on by
holders of Common Stock, voting together with the Common Stock as a single class
at all meetings of the stockholders, except that holders of Class ABII Preferred
Stock (if any) will not be entitled to vote in the election of directors
generally unless the market price of the Common Stock is less than $3.00 per
share. Each share of Class AA Preferred Stock entitles its holder to cast
the number of votes equal to the number of votes which could be cast in such
vote by a holder of the number of shares of Common Stock into which such shares
of Class AA Preferred Stock is convertible based on a price of $6.00 per share.
Each share of Class AB Preferred Stock will entitle its holder to cast the
number of votes equal to the number of votes which could be cast in such vote by
a holder of the number of shares of Common Stock into which such share of Class
AB Preferred Stock is convertible based on a price of $5.25 per share. Upon its
purchase of $40,000,000 initial liquidation value (40,000 shares) of Class AA
Preferred Stock and $35,000,000 initial liquidation value (35,000 shares) of
Class AB Preferred Stock and 898,845 shares of Common Stock (from certain
stockholders), Prometheus will have acquired an aggregate of up to approximately
57% of the total voting power of the Company except with respect to the election
of directors generally. Such securities will have an aggregate of up to
approximately 48.6% of the total voting power of the Company with respect to the
election of directors generally (other than directors elected exclusively by
holders of Class AA and Class AB Preferred Stock), subject to increase to up to
approximately 57% if the market price of the Common Stock is less than $3.00 per
share (based on the same assumptions as above). Prometheus may acquire
additional voting power under certain circumstances including the conversion of
Class AA Preferred Stock following an adjustment of the conversion price, the
exercise of the 1,000,000 Warrants, subject to increase if the exercise price
and the number of shares of Common Stock into which each Warrant will convert
upon exercise are adjusted, and the exercise of the Contingent Warrants. Thus,
the Transactions will have the effect of diluting the voting power of the
existing stockholders.
7
<PAGE>
Change of Control. As described above, Prometheus will have substantial
voting power from its acquisition of securities in the Transactions, including
the right to elect under certain circumstances a majority of the Board, its
Executive Committee and other committees. The holders of Class AA Preferred
Stock and Class AB Preferred Stock will also have certain consent rights. To
effect certain actions or transactions the consent of the holders of at least 66
2/3% of each of the Class AA Preferred Stock, the Class ABI Preferred Stock and
the Class ABII Preferred Stock will be required. Further, under the Company's
amended certificate of incorporation and bylaws, and the amended bylaws of the
Company's subsidiaries, the Company will not, and will not permit any of its
subsidiaries to, engage in or agree to engage in certain significant actions or
transactions, without the affirmative vote of over 81% of the Board (the
Supermajority Director Approval) or the affirmative vote of over 81% of the
members of the Executive Committee (Supermajority Executive Committee Approval).
Therefore, the Company will need the approval of at least one of the three
Preferred Stock Directors (together with 12 non-Preferred Stock Directors) or
the unanimous approval of the Executive Committee, including two Preferred Stock
Directors, to engage in significant actions or transactions. As a result,
Prometheus will have substantial influence over; and could under certain
circumstances exercise effective control of, the direction and management of the
Company and the conduct of its business. There can be no assurance that the
influence and participation of Prometheus and the Preferred Stock Directors in
the direction and management of the Company will have a positive effect on the
Company's financial performance and condition.
Anti-takeover Effects. Prometheus's representation on the Board and the
Executive Committee, its voting rights, its consent rights, the requirements of
Supermajority Director Approval and Supermajority Executive Committee Approval
for certain significant actions and transactions, the amendments to the
certificate of incorporation increasing the amount of authorized Common Stock
and other aspects of the Transactions could have anti-takeover effects. Certain
provisions of Delaware law and of the Company's Amended and Restated Certificate
of Incorporation could have the effect of making it more difficult for a third
party to acquire, or of discouraging a third party from attempting to acquire,
control of the Company. Such provisions could deter, delay or prevent tender
offers or other takeover proposals or attempts that might result in benefits to
stockholders including the payment to stockholders of a premium over the market
price of the Common Stock.
Shares Eligible for Future Sale. The Company has outstanding 11,611,498
shares of Common Stock, of which approximately 8,400,000 shares are freely
tradable without restriction (including shares subject to this Prospectus) and
approximately 3,200,000 shares are saleable subject to certain volume and other
restrictions of Rule 144 under the Securities Act. In addition, at least
8,181,976 shares are issuable upon the conversion of the Company's outstanding
classes of preferred stock and at least 923,323 shares are issuable upon
exercise of currently exercisable options and warrants. Additional shares would
be issuable upon the adjustment and conversion of the Class AA Preferred Stock,
the sale and conversion of the Class AB Preferred Stock, the adjustment and
exercise of the outstanding Warrants, the issuance, adjustment and exercise of
the additional Warrants and the issuance, adjustment and exercise of the
Contingent Warrants. See "Dilution." Sale of substantial amounts of such shares
in the public market or the prospect of such sales could materially adversely
affect the market price of the Common Stock.
Employees and Subcontractors. As of September 30, 1997, the Company
employed 568 (538 full-time and 30 part-time) persons, including corporate staff
and other personnel involved in sales, construction management and customer
service. Although none of the Company's employees are covered by collective
bargaining agreements, many of the subcontractors and suppliers which the
Company engages in various markets are represented by labor unions or are
subject to collective bargaining agreements. The Company believes that its
relations with its employees, subcontractors and suppliers are good.
The Company's operations are dependent on the continued efforts of its
executive officers and on senior management of the Company. In addition, the
operations of each subsidiary are dependent upon the senior management of the
acquired builders. If any of these people become unable to continue in their
present roles, or if the Company is unable to attract and retain other skilled
employees, the Company's business could be adversely affected.
8
<PAGE>
PRICE RANGE OF COMMON STOCK
The Common Stock has traded on the Nasdaq National Market since May 16,
1996. On March 19, 1998, the sale price of the Common Stock was $5.00 per share.
The following table sets forth the range of high and low sale prices for the
Common Stock, as reported on the Nasdaq National Market, for the period from May
16, 1996, the date of the Company's initial public offering, through March 19,
1998.
High Low
---- ---
1996
Second quarter(1) $9.25 $8.75
Third quarter $9.00 $7.75
Fourth quarter $8.00 $4.56
1997
First quarter $6.88 $5.25
Second quarter $6.63 $4.88
Third quarter $6.50 $4.50
Fourth quarter $5.25 $4.00
1998
First quarter(2) $5.50 $4.25
--------------
(1) The Company's common stock commenced trading on May 16, 1996 at
$9.00 per share.
(2) January 1 through March 19, 1998.
The number of record holders of the Common Stock as of March 12, 1998
was 91, which does not include beneficial owners who hold the Common Stock in
street name.
USE OF PROCEEDS
The sale of the Common Stock offered hereby is for the account of the
Selling Securityholders. Accordingly, the Company will not receive any of the
proceeds from the sale by the Selling Securityholders of the Common Stock.
9
<PAGE>
SELLING SECURITYHOLDERS
The table below sets forth information regarding the beneficial
ownership of the Common Stock by the Selling Securityholders as of March 19,
1998 and is adjusted to reflect the sale of Common Stock offered hereby.
<TABLE>
<CAPTION>
Relationship Shares Owned Shares Shares Owned
Name With the Company Before the Offering Being Offered After the Offering
- ---- ---------------- ------------------- ------------- ------------------
<S> <C> <C> <C> <C>
S.A. Mallard, LP 65,000.00 65,000.00 0
D.W. Hutson
Construction Co.(1) 396,560.00 396,560.00 0
Don A. Galloway(2) President, Don Galloway Homes 600,000.00 600,000.00 0
Lanold W. Caldwell President/CEO, Sunstar Homes 382,628.00 382,628.00 0
Lawrence J. Witek Director; Executive Vice
President/COO, Sunstar Homes 367,628.00 367,628.00 0
Thomas B. Buffington Director; President, Buffington
Homes 664,263.50 664,263.50 0
James Giddens
and Karen Giddens President, Central Texas/San
Antonio Division, Buffington Homes 332,132.25 332,132.25 0
Edward A. Kirkpatrick
and Lori M. Kirkpatrick President, Austin Division,
Buffington Homes 301,974.25 301,974.25 0
Robert R. Short Director; President,
The Genesee Company 1,569,517.00 1,569,517.00 0
J. Christopher Stuhmer Director; President,
Christopher Homes 1,509,409.00 1,509,409.00 0
Charles W. Arnold, III(1) Vice President/Purchasing/Construction,
DW Hutson Construction Company 3,280.00 3,280.00 0
Charles W. Arnold, Jr.(1) General Counsel to DW Hutson
Construction Company 6,380.00 6,380.00 0
Dana Skaff(1) Former Drafter, DW Hutson Construction
Company 500.00 500.00 0
Dorothy Scott(1) 1,680.00 1,680.00 0
John Zakoske(1) Vice President/Chief Financial Officer,
DW Hutson Construction Company 2,000.00 2,000.00 0
Raymond McDonald(1) Former Vice President/Office Manager,
DW Hutson Construction Company 2,920.00 2,920.00 0
Jennifer Grant(1) Drafter, DW Hutson Construction Company 1,800.00 1,800.00 0
Patricia DeCrosta(1) Closing Agent, DW Hutson Construction
Company 1,660.00 1,660.00 0
Phillip Daniel(1) Vice President/Regional Construction
Manager, DW Hutson Construction
Company 3,240.00 3,240.00 0
David Hinson(1) Vice President/Director of Construction,
DW Hutson Construction Company 3,360.00 3,360.00 0
Raymond Crosby(1) Drafting Manager, DW Hutson Construction
Company 3,300.00 3,300.00 0
Sherry Kehoe(1) Closing Agent, DW Hutson Construction
Company 2,780.00 2,780.00 0
Donald Hinson(1) President, DW Hutson Construction
Company 4,060.00 4,060.00 0
Kimberly Hutson(1) Former Vice President/Closing Agent,
DW Hutson Construction Company 13,760.00 13,760.00 0
Nancy Hutson(1) Former Vice President, DW Hutson
Construction Company 10,860.00 10,860.00 0
David Hutson(1) 115,500.00 115,500.00 0
------------ ------------ -
TOTAL 6,366,192.00 6,366,192.00 0
</TABLE>
- ------------------------------------
(1) Shares issuable upon the conversion of preferred stock based on the
current market price.
(2) Shares issuable upon the conversion of preferred stock.
Because a Selling Securityholder may offer by this Prospectus all or
some part of the Common Stock which it holds, no estimate can be given as of the
date hereof as to the amount of Common Stock actually to be sold by a Selling
Securityholder or as to the amount of Common Stock that will be held by a
Selling Securityholder upon the termination of such offering. See "Plan of
Distribution."
10
<PAGE>
PLAN OF DISTRIBUTION
Any or all of the Common Stock offered hereby may be sold from time to
time to purchasers directly by a Selling Securityholder. Alternatively, a
Selling Securityholder may from time to time offer any or all of the Common
Stock to or through underwriters, dealers, brokers or other agents. In addition,
the Selling Securityholders and/or any underwriter, broker, dealer or other
agent may engage in hedging transactions with respect to the Common Stock. In
connection with such transactions, shares of Common Stock offered hereby may be
sold or delivered to cover any short positions resulting from such transactions.
The Company will receive no proceeds from the sale of the Common Stock offered
hereby.
The Common Stock offered hereby may be sold from time to time in one or
more transactions at a fixed offering price, which may be changed, or at varying
prices determined at the time of sale or at negotiated prices. Such prices will
be determined by a Selling Securityholder or by agreement between a Selling
Securityholder and its underwriters, dealers, brokers or other agents.
Any underwriters, dealers, brokers or other agents to or through whom
Common Stock offered hereby is sold may receive compensation in the form of
underwriting discounts, concessions, commissions or fees from a Selling
Securityholder and/or purchasers of Common Stock for whom they may act as agent
or to whom they may sell as principal, or both (which compensation to a
particular underwriter, broker, dealer or other agent might be in excess of
customary commissions). In addition, a Selling Securityholder and any such
underwriters, dealers, brokers or other agents may be deemed to be underwriters
under the Securities Act, and any profits on the sale of Common Stock by them
and any discounts, commissions or concessions received by any of such persons
may be deemed to be underwriting discounts and commissions under the Securities
Act. Those who act as underwriter, broker, dealer or other agent in connection
with the sale of the Common Stock will be selected by a Selling Securityholder
and may have other business relationships with the Company and its subsidiaries
or affiliates in the ordinary course of business. The Company cannot presently
estimate the amount of any such discounts, commissions or concessions. The
Company knows of no existing arrangements between the Selling Securityholders
and any underwriter, dealer, broker or other agent.
At any time a particular offer of Common Stock is made by a Selling
Securityholder, if required, a Prospectus Supplement will be distributed which
will set forth the identity of, and certain information relating to, such
Selling Securityholder, the aggregate amounts of Common Stock being offered and
the terms of the offering, including the name or names of any underwriters,
dealers, brokers or other agents, any discounts, commissions and other items
constituting compensation from such Selling Securityholder and any discounts,
commissions or concessions allowed or reallowed or paid to dealers. Such
Prospectus Supplement and, if necessary, a post-effective amendment to the
Registration Statement of which this Prospectus is a part will be filed with the
Commission to reflect the disclosure of additional information with respect to
the distribution of the Common Stock.
To comply with certain states' securities laws, if applicable, the
Common Stock offered hereby may be sold in such states only through brokers or
dealers. In addition, in certain states the Common Stock may not be sold unless
it has been registered or qualified for sale in such state or an exemption from
registration or qualification is available and complied with.
11
<PAGE>
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for
the Company by Arent Fox Kintner Plotkin & Kahn, PLLC, Washington, D.C.
EXPERTS
The audited historical financial statements incorporated by reference
in this Prospectus to the Annual Report on Form 10-K for the period ended
December 31, 1996, the Current Report on Form 8-K, dated March 17, 1997 and as
amended by Amendment No. 1 dated May 15, 1997, and the Current Report on Form
8-K, dated September 10, 1997 and as amended by Amendment No. 1 dated November
10, 1997, and the Proxy Statement dated February 19, 1998 have been so
incorporated in reliance on the reports of Price Waterhouse LLP and Hein +
Associates LLP, independent accountants, given on the authority of said firms as
experts in auditing and accounting.
The financial statements of Solaris Development Corporation included in
the Annual Report (Form 10-K) of The Fortress Group, Inc. for the year ended
December 31, 1996 and in the Proxy Statement of The Fortress Group, Inc. dated
February 19, 1998 have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon included therein and incorporated herein by
reference. Such financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
12
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Set forth below is an estimate of the approximate amount of the fees
and expenses payable by the Registrant.
Securities and Exchange Commission registration fee............. $9,440
*Accounting fees and expenses................................... 3,000
*Legal fees and expenses........................................ 10,000
*Printing and engraving expenses................................ 700
*Miscellaneous expenses......................................... 200
-------
Total...................................... $23,340
=======
- ----------------
* Estimated
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law, as amended (the
DGCL), provides that a corporation shall have power to indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe that his conduct was unlawful.
Section 102(b)(7) of the DGCL permits a corporation to include in its
certificate of incorporation a provision eliminating or limiting the personal
liability of a director to the corporation or its stockholders for monetary
damages for breach of fiduciary duty as a director, provided that such provision
shall not eliminate or limit the liability of a director (i) for any breach of
the director's duty of loyalty to the corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL or (iv) for any
transaction from which the director derived an improper personal benefit.
The Registrant has entered into Indemnification Agreements with its
directors and officers which require indemnification in certain circumstances,
establish specific payment procedures and provide certain other rights to such
persons.
II-1
<PAGE>
Item 16. Exhibits.
Number Description
2.1 Amended and Restated Purchase Agreement among the Company;
Whittaker Construction, Incorporated; RRKTG Lumber, Inc.;
Lewis and Clark Title Company and person named therein
(incorporated herein by reference to Exhibit 2.1 to the
Company's Form 8-K dated March 16, 1998).
3.1 Amended and Restated Certificate of Incorporation of the
Company (incorporated herein by reference to Exhibit 3.1 to
the Company's Registration Statement on Form S-1 File No.
333-2332).
3.2 Certificate of Amendment of Certificate of Incorporation of
the Company (incorporated herein by reference to Exhibit
3.1(a) to Amendment No. 3 to the Company's Registration
Statement on Form S-1 File No. 333-2332).
3.3 Certificate of Amendment of Certificate of Incorporation of
the Company, effective March 6, 1998 (incorporated herein by
reference to Exhibit 3.1 to the Company's Form 8-K dated March
16, 1998).
3.4 Amendments to the Company's By-laws, effective March 6, 1998
(incorporated herein by reference to Exhibit 3.2 to the
Company's Form 8-K dated March 16, 1998).
4.1 Stockholders' Agreement, dated as of April 15, 1996, by and
among the Company and certain shareholders (incorporated
herein by reference to Exhibit 10.7 to Amendment No. 1 to the
Company's Registration Statement on Form S-1 File No. 333-2332).
4.2 Certificate of Amendment of Certificate of Designations,
Preferences and Relative, Participating, Optional and Other
Special Rights of Preferred Stock and Qualifications,
Limitations and Restrictions thereof of Class AA Convertible
Preferred Stock of the Company (incorporated herein by
reference to Exhibit 4.5 to the Company's Form 8-K dated March
16, 1998).
4.3 Amended and Restated Warrant Agreement by and between the
Company and Prometheus Homebuilders LLC (incorporated herein
by reference to Exhibit 4.6 to the Company's Form 8-K dated
March 16, 1998).
4.4 Amended and Restated Stockholders Agreement by and among the
Company, Prometheus Homebuilders, LLC and the Stockholders
named therein (incorporated herein by reference to Exhibit 4.7
to the Company's Form 8-K dated March 16, 1998).
4.5 Amended and Restated Registration Rights Agreement by and
between the Company and Prometheus Homebuilders, LLC
(incorporated herein by reference to Exhibit 4.8 to the
Company's Form 8-K dated March 16, 1998).
5 Opinion of Arent Fox Kintner Plotkin & Kahn, PLLC as to the
legality of the Common Stock being registered (filed
herewith).
10 Second Amended and Restated Stock Purchase Agreement dated as of
February 19, 1998 by and between the Company and Prometheus
Homebuilders LLC (incorporated by reference to Exhibit 10 to the
Company's Form 8-K dated March 16, 1998).
II-2
<PAGE>
23.1 Consent of Arent Fox Kintner Plotkin & Kahn, PLLC
(included in Exhibit 5).
23.2 Consent of Price Waterhouse LLP (filed herewith).
23.3 Consent of Ernst & Young LLP (filed herewith).
23.4 Consent of Hein + Associates LLP (filed herewith).
24 Power of Attorney of the Board of Directors (previously filed).
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at the that time
shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to the directors, officers and controlling persons
of the Registrant pursuant to the provisions referred to in Item 15 or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of McLean, State of Virginia, on this 20th day of March,
1998.
THE FORTRESS GROUP, INC.
By: /s/ James J. Martell, Jr.
--------------------------
James J. Martell, Jr., President and
Chief Executive Officer
II-4
<PAGE>
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on March 20, 1998.
<TABLE>
<CAPTION>
Signatures Title
- ---------------------------------------- ------------------------------------------------------------------------
<S> <C>
/s/ J. Marshall Coleman* Chairman of the Board and Director
- ----------------------------------------
J. Marshall Coleman
/s/ James J. Martell, Jr.* President, Chief Executive Officer and Director
- ----------------------------------------
James J. Martell, Jr.
/s/ George C. Yeonas* Chief Operating Officer and Director
- ----------------------------------------
George C. Yeonas
/s/ Jamie M. Pirrello* Chief Financial Officer
- ----------------------------------------
Jamie M. Pirrello
/s/ Thomas B. Buffington* Director
- ----------------------------------------
Thomas B. Buffington
Director
- ----------------------------------------
J. Christopher Stuhmer
/s/ Lawrence J. Witek Director
- ----------------------------------------
Lawrence J. Witek
/s/ Robert Short* Director
- ----------------------------------------
Robert Short
Director
- ----------------------------------------
Mark L. Fine
Director
- ----------------------------------------
Robert P. Freeman
Director
- ----------------------------------------
Murry N. Gunty
</TABLE>
II-5
<PAGE>
Director
- ----------------------------------------
James D. Klingbeil
Director
- ----------------------------------------
Edward J. Mathias
Director
- ----------------------------------------
Steven D. Rivers
/s/ William A. Shutzer* Director
- ----------------------------------------
William A. Shutzer
/s/ Charles F. Smith* Director
- ----------------------------------------
Charles F. Smith
*Signed by James J. Martell, Jr. pursuant to power of attorney previously filed.
/s/ James J. Martell, Jr.
- ----------------------------------------
II-6
EXHIBIT 5
March 20, 1998
The Board of Directors
The Fortress Group, Inc.
1650 Tysons Blvd., Suite 600
McLean, Virginia 22102
Gentlemen:
We have acted as counsel to The Fortress Group, Inc. (the "Company") with
respect to the Company's Registration Statement on Form S-3, filed by the
Company with the Securities and Exchange Commission in connection with the
registration under the Securities Act of 1933, as amended, of 6,366,192 shares
of Common Stock, par value $.01 per share (the "Shares").
As counsel to the Company, we have examined the Company's Certificate of
Incorporation, as amended as of the date hereof, and such records, certificates
and other documents of the Company, as well as relevant statutes, regulations,
published rulings and such questions of law, as we considered necessary or
appropriate for the purpose of this opinion.
We assume that, prior to the sale of any Shares to which the Registration
Statement relates, appropriate action will be taken to register and qualify such
Shares for sale, to the extent necessary, under any applicable state securities
laws.
Based on the foregoing, we are of the opinion that the Shares currently
outstanding are, and the Shares issuable upon conversion of the Company's
preferred stock will be upon such conversion, validly issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to all references to our firm in the Registration
Statement. In giving this consent, we do not hereby admit that we come within
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933, as amended or the General Rules and Regulations
thereunder.
Very truly yours,
ARENT FOX KINTNER PLOTKIN & KAHN, PLLC
By: /s/ Jeffrey E. Jordan
----------------------------
Jeffrey E. Jordan
EXHIBIT 23.2
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our reports as
of the dates and relating to the financial statements of the companies listed
below, which appear on the following pages of the respective documents
previously filed with the Securities and Exchange Commission.
<TABLE>
<CAPTION>
Page
Company Date of Report Ref. Document
------- -------------- ---- --------
<S> <C> <C> <C>
The Fortress Group, Inc. February 18, 1997 F-7 Annual Report on Form 10-K for the year
ended December 31, 1996
Combined Predecessor February 20, 1997 F-26 Annual Report on Form 10-K for the year
Companies ended December 31, 1996
Buffington Homes, Inc. November 25, 1996 F-41 Annual Report on Form 10-K for the year
ended December 31, 1996
Christopher Homes, Inc. February 11, 1997 F-52 Annual Report on Form 10-K for the year
and Affiliates ended December 31, 1996
The Genesee Company and February 20, 1997 F-64 Annual Report on Form 10-K for the year
Related Entities ended December 31, 1996
Solaris Development December 11, 1996 F-78 Annual Report on Form 10-K for the year
Corporation ended December 31, 1996
D.W. Hutson Construction, April 24, 1997 5 Current Report on Form 8-K dated March 17,
Inc 1997 as amended by Amendment No. 1 dated
May 15, 1997
Don Galloway Homes Inc. October 10, 1997 4 Current Report on Form 8-K dated September
and Affiliates 10, 1997 as amended by Amendment No. 1
dated November 10, 1997
The Fortress Group, Inc. February 18, 1997 F-11 Proxy Statement dated February 19, 1998.
<PAGE>
Whittaker Construction Inc. January 14, 1998 F-38 Proxy Statement dated February 19, 1998.
and Affiliates
Don Galloway Homes Inc. October 10, 1997 F-51 Proxy Statement dated February 19, 1998.
and Affiliates
D.W. Hutson Construction, April 24, 1997 F-61 Proxy Statement dated February 19, 1998.
Inc.
Landmark Homes, Inc. October 11, 1996 F-72 Proxy Statement dated February 19, 1998.
Combined Predecessor February 20, 1997 F-82 Proxy Statement dated February 19, 1998.
Companies
Buffington Homes, Inc. November 25, 1996 F-96 Proxy Statement dated February 19, 1998.
Christopher Homes, Inc. February 11, 1997 F-106 Proxy Statement dated February 19, 1998.
and Affiliates
The Genesee Company and February 20, 1997 F-117 Proxy Statement dated February 19, 1998.
Related Entities
Solaris Development December 11, 1996 F-130 Proxy Statement dated February 19, 1998.
Corporation
</TABLE>
We also consent to the references to us under the heading "Experts" in such
Prospectus.
Price Waterhouse LLP
Washington, DC
March 16, 1998
EXHIBIT 23.3
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3 No. 333-48147) and related Prospectus of
The Fortress Group, Inc. for the registration of 6,366,192 shares of its common
stock and to the incorporation by reference therein of our report dated February
10, 1996 with respect to the consolidated financial statements of Solaris
Development Corporation included in the Annual Report (Form 10-K) of The
Fortress Group, Inc. for the year ended December 31, 1996 and in the Proxy
Statement of The Fortress Group, Inc. dated February 19, 1998, both filed with
the Securities Exchange Commission.
/s/ ERNST & YOUNG LLP
March 17, 1998
Raleigh, North Carolina
EXHIBIT 23.4
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in the Registration Statement of
The Fortress Group of our report dated December 12, 1995, accompanying the
combined financial statements of The Genesee Company and related entities also
incorporated by reference in such Registration Statement.
Hein + Associates LLP
Denver, Colorado
March 13, 1998
