Hovnanian Enterprises, Inc. (NYSE:HOV) (the “Company”) announced
today that in connection with the previously announced tender
offers (the “Tender Offers”) by its wholly owned subsidiary, K.
Hovnanian Enterprises, Inc. (“K. Hovnanian”), to purchase for cash
any and all of its $75 million 10.000% Senior Secured Second Lien
Notes due 2018 (the “2018 Notes”), $145 million 9.125% Senior
Secured Second Lien Notes due 2020 (the “2020 9.125% Notes”) and
$577 million 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 “Tender Notes”) and related consent solicitations
(the “Consent Solicitations”) on the terms and subject to the
conditions set forth in an Offer to Purchase and Consent
Solicitation Statement, dated June 26, 2017 (as supplemented by the
supplement dated July 10, 2017, the “Statement”), and in the
related Letter of Transmittal and Consent (the “Letter of
Transmittal” and collectively with the Statement, the “Tender Offer
Documents”):
(1) the Tenders Offers expired at 11:59 p.m., New York City
time, on July 26, 2017 (the “Expiration Time”);
(2) as of the Expiration Time, K. Hovnanian had received tenders
and consents from the holders of $75,000,000, or 100.00%, of the
total outstanding principal amount of the 2018 Notes;
(3) as of the Expiration Time, K. Hovnanian had received tenders
and consents from the holders of $87,321,000, or approximately
60.22%, of the total outstanding principal amount of the 2020
9.125% Notes;
(4) as of the Expiration Time, K. Hovnanian had received tenders
and consents from the holders of $575,912,000, or approximately
99.81%, of the total outstanding principal amount of the 2020 7.25%
Notes; and
(5) K. Hovnanian has accepted for purchase all Tender Notes
validly tendered and not validly withdrawn in the Tender
Offers.
Registered holders of each series of Tender Notes (the
“Holders”) who validly tendered and did not validly withdraw their
Tender Notes on or prior to the applicable early tender deadline
received on July 27, 2017 the applicable Total Consideration (as
set forth below), which includes an Early Tender Payment (as set
forth below). Holders who validly tendered their Tender Notes on or
prior to the Expiration Time but after the applicable early tender
deadline received on July 27, 2017 the applicable Tender Offer
Consideration (as set forth below), which is an amount equal to the
applicable Total Consideration less the Early Tender Payment, for
their Tender Notes. In addition to the Total Consideration or the
Tender Offer Consideration, as applicable, all Holders whose Tender
Notes were purchased in the Tender Offers received accrued and
unpaid interest in respect of their purchased Tender Notes from the
most recent interest payment date to, but not including, July 27,
2017.
The table below sets forth the Tender Offer Consideration, Early
Tender Payment and Total Consideration for the Tender Offers.
Title of Security |
|
Principal Amount |
|
Tender Offer Consideration(1) |
|
Early Tender Payment(1) |
|
Total Consideration(1)(2) |
2018
Notes |
|
$75,000,000 |
|
$1,029.60 |
|
$50.00 |
|
$1,079.60 |
|
|
|
|
|
|
|
|
|
2020
9.125% Notes |
|
$145,000,000 |
|
$980.00 |
|
$50.00 |
|
$1,030.00 |
|
|
|
|
|
|
|
|
|
2020
7.250% Notes |
|
$577,000,000 |
|
$980.00 |
|
$50.00 |
|
$1,030.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Per
$1,000 principal amount of Tender Notes that were accepted for
purchase. |
(2)
Includes the applicable Early Tender Payment. |
|
The Company also announced that:
(1) on July 27, 2017, K. Hovnanian satisfied and discharged its
obligations under the indenture under which the 2020 9.125% Notes
were issued (the “2020 9.125% Notes Indenture”) and the related
security documents in accordance with the satisfaction and
discharge provisions of the 2020 9.125% Notes Indenture and in
connection therewith will call for redemption on November 15, 2017
all 2020 9.125% Notes that were not validly tendered as of the
Expiration Time in accordance with the redemption provisions of the
2020 9.125% Notes Indenture. Upon the satisfaction and
discharge of the 2020 9.125% Notes Indenture on July 27, 2017, all
of the liens on the collateral securing the 2020 9.125% Notes were
released and K. Hovnanian, the Company and the other guarantors
were discharged from their respective obligations under the 2020
9.125% Notes and the guarantees thereof; and
(2) on July 27, 2017, K. Hovnanian satisfied and discharged its
obligations under the indenture under which the 2020 7.25% Notes
were issued (the “2020 7.25% Notes Indenture”) and the related
security documents in accordance with the satisfaction and
discharge provisions of the 2020 7.25% Notes Indenture and in
connection therewith will call for redemption on October 15, 2017
all 2020 7.25% Notes that were not validly tendered as of the
Expiration Time in accordance with the redemption provisions of the
2020 7.25% Notes Indenture. Upon the satisfaction and
discharge of the 2020 7.25% Notes Indenture on July 27, 2017, all
of the liens on the collateral securing the 2020 7.25% Notes were
released and K. Hovnanian, the Company and the other guarantors
were discharged from their respective obligations under the 2020
7.25% Notes and the guarantees thereof.
The consents received in the Consent Solicitations exceeded the
amount needed to approve the proposed amendments to the indenture
under which the 2018 Notes were issued and the 2020 7.25% Notes
Indenture and the related security documents. The consents received
in the Consent Solicitation for the 2020 9.125% Notes exceeded the
amount needed to approve certain but not all of the proposed
amendments to the 2020 9.125% Notes Indenture and the related
security documents. However, prior to accepting the Tender Notes in
the Tender Offers, K. Hovnanian waived the conditions relating to
(i) the receipt of the Required Consents (as defined in the
Statement) with respect to the 2020 9.125% Notes and (ii) the
execution and delivery of a supplemental indenture and applicable
security release documents effecting the proposed amendments with
respect to each series of Tender Notes.
K. Hovnanian funded the purchase of the Tender Notes in the
Tender Offers and the satisfaction and discharge of the 2020 9.125%
Notes Indenture and the 2020 7.25% Notes Indenture with the net
proceeds from its previously announced offering of senior secured
notes, which offering also closed on July 27, 2017.
This announcement does not constitute an offer to sell or the
solicitation of an offer to buy the secured notes, the Tender Notes
or any other securities of the Company or K. Hovnanian in any
jurisdiction in which such an offer or sale would be unlawful. The
Tender Offers and Consent Solicitations were 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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