Hovnanian Enterprises, Inc. (NYSE:HOV) (the “Company”) announced
today that its wholly-owned subsidiary, K. Hovnanian Enterprises,
Inc. (“K. Hovnanian”), has commenced a tender offer (the “Tender
Offer”) to purchase for cash any and all of its 8.625% Senior Notes
due 2017 (the “Notes”) on the terms and subject to the conditions
set forth in an Offer to Purchase and Consent Solicitation
Statement, dated July 29, 2016 (as it may be amended or
supplemented from time to time, the “Statement”), and in the
related Letter of Transmittal and Consent (as it may be amended or
supplemented from time to time, the “Letter of Transmittal” and
collectively with the Statement, the “Tender Offer
Documents”). Concurrently with the Tender Offer, and on the
terms and subject to the conditions set forth in the Statement, K.
Hovnanian is soliciting consents (the “Consent Solicitation”) of
holders of the Notes to proposed amendments to the indenture
governing the Notes (the “Notes Indenture”), providing for the
elimination of most of the restrictive covenants and certain events
of default contained therein. Holders that tender Notes must
also consent to such proposed amendments to the Notes Indenture in
order to tender their Notes.
The Tender Offer will expire at 8:30 a.m., New York City time,
on September 7, 2016, unless extended or earlier terminated (the
“Expiration Time”). Holders of the Notes must validly tender
their Notes at or before 5:00 p.m., New York City time, on August
11, 2016, unless extended or earlier terminated (the “Early Tender
Deadline”) in order to be eligible to receive the Total
Consideration (as defined below), which includes the Early Tender
Payment (as defined below). Notes tendered may be withdrawn
at any time at or before 5:00 p.m., New York City time on August
11, 2016 unless extended (the “Withdrawal Deadline”), but not
thereafter, unless required by applicable law.
The total consideration for each $1,000 principal amount of
Notes validly tendered and not withdrawn at or before the Early
Tender Deadline and purchased pursuant to the Tender Offer will be
$1,010.00 (the “Total Consideration”). The Total
Consideration includes a payment of $30.00 per $1,000 principal
amount of Notes (the “Early Tender Payment”) payable only in
respect of Notes tendered with consents at or before the Early
Tender Deadline. Holders validly tendering Notes after the
Early Tender Deadline but at or before the Expiration Time will be
eligible to receive only the tender offer consideration of $980.00
per $1,000 principal amount of Notes (the “Tender Offer
Consideration”), namely an amount equal to the Total Consideration
less the Early Tender Payment. In addition to the Total
Consideration or Tender Offer Consideration, as applicable, all
holders whose Notes are purchased in the Tender Offer will receive
accrued and unpaid interest in respect of their purchased Notes
from the most recent interest payment date to, but not including,
the payment date for Notes purchased in the Tender Offer.
Subject to the terms and conditions of the Tender Offer being
satisfied or waived (if applicable), K. Hovnanian will, after the
Expiration Time (the “Acceptance Date”), accept for purchase all
Notes validly tendered at or prior to the Expiration Time (and not
validly withdrawn before the Withdrawal Deadline). K.
Hovnanian will pay the Total Consideration or Tender Offer
Consideration, as the case may be, for, and accrued and unpaid
interest on, the Notes accepted for purchase at the Acceptance Date
on a date that is on or promptly following the Acceptance Date.
K. Hovnanian’s obligation to accept for purchase, and to pay
for, Notes validly tendered and not validly withdrawn pursuant to
the Tender Offer is conditioned upon the satisfaction or, if
applicable, waiver of certain conditions, which are more fully
described in the Tender Offer Documents, including, among others,
K. Hovnanian’s receipt (1) of consents of holders of at least a
majority in principal amount of the outstanding Notes to the
proposed amendments to the Notes Indenture, (2) of Notes tenders in
the Tender Offer in an amount equal to at least 90% of the
aggregate outstanding principal amount of the outstanding Notes as
of the date of the Statement and (3) of aggregate net cash proceeds
from certain privately placed financings described below to fund
the aggregate Total Consideration plus accrued and unpaid interest
in respect of all Notes.
Credit Suisse Securities (USA) LLC and Merrill Lynch, Pierce,
Fenner & Smith Incorporated are serving as dealer managers for
the Tender Offer and the solicitation agents for the Consent
Solicitation. Global Bondholder Services Corporation is
serving as the depositary and the information agent for the Tender
Offer and Consent Solicitation. Any question regarding
procedures for tendering Notes may be directed to Global Bondholder
Services by phone at 866-470-4300 (toll free) or
212-430-3774. Questions regarding the terms of the Tender
Offer and Consent Solicitation may be directed to Credit Suisse
Securities (USA) LLC by phone toll free at 800-820-1653 or collect
at 212-325-2476 and Merrill Lynch, Pierce, Fenner & Smith
Incorporated by phone toll free at 888-292-0070 or collect at
646-855-2464.
Concurrently with the Tender Offer and Consent Solicitation, the
Company and K. Hovnanian are entering into financing commitments
with affiliates of a certain investment manager (collectively, the
“Investor”) pursuant to which the Investor will fund a $75.0
million senior secured term loan facility (the “Term Loan
Facility”) with a scheduled maturity in August 2019 and bearing
interest at a rate equal to LIBOR plus an applicable margin of
7.00% or, at K. Hovnanian’s option, a base rate plus an applicable
margin of 6.00% and $75.0 million aggregate principal amount of
10.00% senior secured second lien notes due October 2018 (the
“Second Lien Notes”) and the Investor will exchange $75.0 million
aggregate principal amount of its existing 9.125% senior secured
second lien notes due November 2020 for $75.0 million of K.
Hovnanian’s newly issued 9.50% senior secured first priority notes
due November 2020 (the “Exchange Notes”).
All of K. Hovnanian’s obligations under the Term Loan Facility
and the Second Lien Notes will be guaranteed by the Company and
substantially all of its subsidiaries, other than its home mortgage
subsidiaries, certain of its title insurance subsidiaries, joint
ventures, subsidiaries holding interests in joint ventures and its
foreign subsidiary. The Term Loan Facility and the guarantees
thereof will be secured on a first lien super priority basis in
relation to K. Hovnanian’s existing 7.25% senior secured first lien
notes due October 2020, and the Second Lien Notes and the
guarantees thereof will be secured on a pari passu second lien
basis with K. Hovnanian’s existing 9.125% senior secured second
lien notes due November 2020, by substantially all of the assets
owned by K. Hovnanian and the guarantors, in each case subject to
permitted liens and certain exceptions.
The Exchange Notes will be guaranteed by the Company and all of
its subsidiaries that will guarantee the Term Loan Facility and the
Second Lien Notes as well as K. Hovnanian JV Holdings, L.L.C. and
its subsidiaries, except for certain joint ventures and joint
venture holding companies (the “Secured Group”). The Exchange
Notes will be secured on a pari passu first lien basis with K.
Hovnanian’s 2.0% senior secured first lien notes due November 2021
and 5.0% senior secured first lien notes due November 2021, by
substantially all of the assets of the members of the Secured
Group, subject to permitted liens and certain exceptions.
The closing of the financings is subject to certain terms and
conditions, including requiring K. Hovnanian to use the net cash
proceeds from the financings in excess of the aggregate amount of
funds needed to consummate the Tender Offer and Consent
Solicitation to repurchase or otherwise retire, discharge or
defease K. Hovnanian’s debt securities with maturities in 2017 or,
as agreed between the Investor and K. Hovnanian, its other
indebtedness. The closing of the financings is expected to
occur on the date of closing of the Tender Offer and Consent
Solicitation.
This press release is neither an offer to purchase or sell nor a
solicitation of an offer to sell or buy the Notes or any other
securities of the Company, including the securities to be issued in
the new financings. This press release also is not a
solicitation of consents to the proposed amendments to the Notes
Indenture. The Tender Offer and Consent Solicitation are
being made solely on the terms and subject to the conditions set
forth in the Tender Offer Documents and the information in this
press release is qualified by reference to such Tender Offer
Documents.
The Second Lien Notes and the Exchange Notes have not been and
will not be registered under the Securities Act of 1933, as amended
(the “Securities Act”), or any state securities laws. The
Second Lien Notes and the Exchange Notes may not be offered or sold
within the United States or to U.S. persons, except pursuant to an
exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and applicable
state securities laws. This press release does not constitute
an offer to sell or the solicitation of an offer to buy the Second
Lien Notes, the Exchange Notes or any other securities of K.
Hovnanian or the Company.
About Hovnanian Enterprises
Hovnanian Enterprises, Inc., founded in 1959 by Kevork S.
Hovnanian, is headquartered in Red Bank, New Jersey. The Company is
one of the nation’s largest homebuilders with operations in
Arizona, California, Delaware, Florida, Georgia, Illinois,
Maryland, New Jersey, Ohio, Pennsylvania, South Carolina, Texas,
Virginia, Washington, D.C. and West Virginia. The Company’s homes
are marketed and sold under the trade names K. Hovnanian® Homes,
Brighton Homes® and Parkwood Builders. As the developer of K.
Hovnanian’s® Four Seasons communities, the Company is also one of
the nation’s largest builders of active lifestyle communities.
Forward-Looking Statements
All statements in this press release that are not historical
facts should be considered as “Forward-Looking Statements”. Such
statements involve known and unknown risks, uncertainties and other
factors that may cause actual results, performance or achievements
of the Company to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements. Although we believe that our plans,
intentions and expectations reflected in, or suggested by, such
forward-looking statements are reasonable, we can give no assurance
that such plans, intentions or expectations will be achieved. By
their nature, forward-looking statements: (i) speak only as of the
date they are made, (ii) are not guarantees of future performance
or results and (iii) are subject to risks, uncertainties and
assumptions that are difficult to predict or quantify. Therefore,
actual results could differ materially and adversely from those
forward-looking statements as a result of a variety of factors.
Such risks, uncertainties and other factors include, but are not
limited to, (1) changes in general and local economic, industry and
business conditions and impacts of the sustained homebuilding
downturn; (2) adverse weather and other environmental conditions
and natural disasters; (3) levels of indebtedness and restrictions
on the Company’s operations and activities imposed by the
agreements governing the Company’s outstanding indebtedness; (4)
the Company's sources of liquidity; (5) changes in credit ratings;
(6) changes in market conditions and seasonality of the Company’s
business; (7) the availability and cost of suitable land and
improved lots; (8) shortages in, and price fluctuations of, raw
materials and labor; (9) regional and local economic factors,
including dependency on certain sectors of the economy, and
employment levels affecting home prices and sales activity in the
markets where the Company builds homes; (10) fluctuations in
interest rates and the availability of mortgage financing; (11)
changes in tax laws affecting the after-tax costs of owning a home;
(12) operations through joint ventures with third parties; (13)
government regulation, including regulations concerning development
of land, the home building, sales and customer financing processes,
tax laws and the environment; (14) product liability litigation,
warranty claims and claims made by mortgage investors; (15) levels
of competition; (16) availability and terms of financing to the
Company; (17) successful identification and integration of
acquisitions; (18) significant influence of the Company’s
controlling stockholders; (19) availability of net operating loss
carryforwards; (20) utility shortages and outages or rate
fluctuations; (21) geopolitical risks, terrorist acts and other
acts of war; (22) increases in cancellations of agreements of sale;
(23) loss of key management personnel or failure to attract
qualified personnel; (24) information technology failures and data
security breaches; (25) legal claims brought against us and not
resolved in our favor; and (26) certain risks, uncertainties and
other factors described in detail in the Company’s Annual Report on
Form 10-K for the fiscal year ended October 31, 2015 and subsequent
filings with the Securities and Exchange Commission. Except as
otherwise required by applicable securities laws, we undertake no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events,
changed circumstances or any other reason.
Contact: J. Larry Sorsby
Executive Vice President & CFO
732-747-7800
Jeffrey T. O’Keefe
Vice President of Investor Relations
732-747-7800
Hovnanian Enterprises (NYSE:HOV)
Historical Stock Chart
From Mar 2024 to Apr 2024
Hovnanian Enterprises (NYSE:HOV)
Historical Stock Chart
From Apr 2023 to Apr 2024