Hovnanian Enterprises, Inc. (NYSE:HOV) (the “Company”) announced
today that its wholly-owned subsidiary, K. Hovnanian Enterprises,
Inc. (“K. Hovnanian”), has commenced tender offers (the “Tender
Offers”) to purchase for cash any and all of its $75 million
outstanding 10.000% Senior Secured Second Lien Notes due 2018 (the
“2018 Notes”), $145 million outstanding 9.125% Senior Secured
Second Lien Notes due 2020 (the “2020 9.125% Notes”) and $577
million outstanding 7.250% Senior Secured First Lien Notes due 2020
(the “2020 7.25% Notes”, and, together with the 2018 Notes and the
2020 9.125% Notes, the “Notes”) on the terms and subject to the
conditions set forth in an Offer to Purchase and Consent
Solicitation Statement, dated June 26, 2017 (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 Offers, and on the
terms and subject to the conditions set forth in the Statement, K.
Hovnanian is soliciting consents (the “Consent Solicitations”) of
registered holders of each series of Notes (the “Holders”) to
proposed amendments to (1) the respective indentures governing such
Notes (the “Notes Indentures”) providing for the elimination of
most of the restrictive covenants and certain events of default
contained therein and (2) the Notes Indentures and the respective
security documents providing for the collateral securing such Notes
(the “Notes Security Documents”) providing for the release of the
collateral securing such Notes. Holders that tender their
Notes must also consent to such proposed amendments to the relevant
Notes Security Documents and the relevant Notes Indenture in order
to tender their Notes. Each Tender Offer and Consent Solicitation
is independent and is not conditioned upon the other Tender Offers
and Consent Solicitations.
The Tender Offers will expire at 11:59 p.m., New York City time,
on July 24, 2017, 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 July 10,
2017, unless extended or earlier terminated (the “Early Tender
Deadline”) in order to be eligible to receive the applicable Total
Consideration (as defined below), which includes the applicable
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 July 10, 2017 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 Offers will be
as set forth in the table below (in each case, the “Total
Consideration”). The Total Consideration for each series of Notes
includes the applicable early tender payment for such series per
$1,000 principal amount of Notes (in each case, the “Early Tender
Payment”) as set forth in the table below.
Title of Security |
CUSIP Nos. |
ISIN
Nos. |
Outstanding PrincipalAmount(1) |
Tender Offer Consideration(2) |
Early Tender Payment(2) |
Total Consideration(2)(3) |
10.000% Senior Secured
Second Lien Notes due 2018 |
442488
CA8, 442488 CB6,U48654 AU8 |
US442488CA84, US442488CB67, USU48654AU88 |
$ |
75,000,000 |
$ |
1,029.60 |
$ |
50.00 |
$ |
1,079.60 |
9.125% Senior Secured
Second Lien Notes due 2020 |
442488
BS0, U48654 AQ7 |
US442488BS02, USU48654AQ76 |
$ |
145,000,000 |
$ |
980.00 |
$ |
50.00 |
$ |
1,030.00 |
7.250% Senior Secured
First Lien Notes due 2020 |
442488
BR2, U48654 AP9 |
US442488BR29, USU48654AP93 |
$ |
577,000,000 |
$ |
980.00 |
$ |
50.00 |
$ |
1,030.00 |
_______________________________________(1) As of June 23, 2017.(2)
Per $1,000 principal amount of Notes that are accepted for
purchase. (3) Includes the applicable Early Tender Payment. |
The Early Tender Payment with respect to a series of Notes is
payable only in respect of Notes of such series tendered with
consents at or before the Early Tender Deadline. Holders
validly tendering Notes of a series after the Early Tender Deadline
but at or before the Expiration Time will be eligible to receive
only the applicable Total Consideration less the applicable Early
Tender Payment amount for such series of Notes (such amount, in
each case, the “Tender Offer Consideration”). In addition to
the Total Consideration or Tender Offer Consideration, as
applicable, all Holders whose Notes are purchased in the Tender
Offers 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
Offers.
Subject to the terms and conditions of the Tender Offers being
satisfied or waived, 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
each of the Tender Offers is conditioned upon the satisfaction or
waiver of certain conditions, which are more fully described in the
Tender Offer Documents, including, among others, K. Hovnanian’s
receipt of (1) aggregate net cash proceeds from certain privately
placed senior secured indebtedness to fund the aggregate Total
Consideration plus accrued and unpaid interest in respect of all
Notes of each series (regardless of the actual amount of Notes
tendered) and fees and expenses incurred in connection therewith
and (2) each of the Required Consents (as defined in the Statement)
of Holders of the applicable series in respect of the proposed
amendments in the Consent Solicitations.
In no event will this press release, the Tender Offer Documents
or the information contained herein or in the Tender Offer
Documents regarding the proposed financings constitute an offer to
purchase or sell or a solicitation of an offer to sell or buy any
of our securities, including those issued in the proposed new
financings.
Credit Suisse Securities (USA) LLC, Citigroup Global Markets
Inc. and J.P. Morgan Securities LLC are serving as dealer managers
for the Tender Offers and the solicitation agents for the Consent
Solicitations. Global Bondholder Services Corporation is
serving as the depositary and the information agent for the Tender
Offers and Consent Solicitations. 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
Offers and Consent Solicitations may be directed to Credit Suisse
Securities (USA) LLC by phone toll free at (800) 820-1653 or
collect at (212) 325-2476, Citigroup Global Markets Inc. by phone
toll free at (800) 558-3745 or collect at (212) 723-6106 and J.P.
Morgan Securities LLC by phone toll free at (866) 834-4666 or
collect at (212) 834-3424.
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 or K. Hovnanian, including any securities
to be issued in the proposed new financings. This press
release also is not a solicitation of consents to the proposed
amendments to the Notes Indentures and the Notes Security
Documents. The Tender Offers and Consent Solicitations 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.
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. Such forward-looking statements include but are not
limited to statements related to the Company’s goals and
expectations with respect to its financial results for
future financial periods. 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 a 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,
2016 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
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