Hovnanian Enterprises, Inc. (NYSE:HOV) (the “Company”) announced
today that in connection with the previously announced exchange
offer (the “Exchange Offer”) by its wholly owned subsidiary, K.
Hovnanian Enterprises, Inc. (“K. Hovnanian”), to exchange up to
$185,000,000 aggregate principal amount of its outstanding 8.000%
Senior Notes due 2019 (the “Existing Notes”) for (1) cash, (2) its
newly issued 13.5% Senior Notes due 2026 (the “New 2026 Notes”) and
(3) its newly issued 5.0% Senior Notes due 2040 (the “New 2040
Notes” and, together with the New 2026 Notes, the “New Notes”) on
the terms and subject to the conditions set forth in a Confidential
Offering Memorandum, dated December 28, 2017 (as was amended or
supplemented from time to time, the “Offering Memorandum”), and in
the related Letter of Transmittal (as was amended or supplemented
from time to time, the “Letter of Transmittal” and, collectively
with the Offering Memorandum, the “Exchange Offer Documents”):
(1) the Exchange Offer expired at 11:59 p.m., New York City
time, on January 29, 2018 (the “Expiration Time”);
(2) as of the Expiration Time, K. Hovnanian had received tenders
from the holders of $170,226,000, or 72.14%, of the total
outstanding principal amount of the Existing Notes; and
(3) all other conditions of the Exchange Offer (including the
financing condition discussed below) have been satisfied or waived,
as applicable, and K. Hovnanian intends to accept all of the
Existing Notes validly tendered and not validly withdrawn in the
Exchange Offer.
Registered holders of the Existing Notes (the “Holders”) who
validly tendered and did not validly withdraw their Existing Notes
on or prior to the withdrawal deadline will receive on February 1,
2018 the following per $1,000 principal amount of Existing Notes
that are accepted for exchange: (1) an amount of cash (the “Cash
Amount”) equal to the product of (a) $1,000 multiplied by (b) the
quotient of (i) $26,000,000 divided by (ii) the total principal
amount of the Existing Notes validly tendered in connection with
the Exchange Offer, (2) an additional amount in cash equal to the
product of (a) the Cash Amount multiplied by (b) 0.02000, (3) the
principal amount of New 2026 Notes equal to the product of (a) the
sum of (i) $1,000 minus (ii) the Cash Amount multiplied by (b)
0.62827 and (4) the principal amount of New 2040 Notes equal to the
product of (a) the sum of (i) $1,000 minus (ii) the Cash Amount
multiplied by (b) 0.62500 (the “Exchange Consideration”). The
aggregate amount of each series of New Notes forming part of the
Exchange Consideration in respect of each participating Holder’s
Existing Notes validly tendered (and not validly withdrawn prior to
the withdrawal deadline) and accepted in the Exchange Offer will be
rounded down, if necessary, to $2,000 or the nearest whole multiple
of $1,000 in excess thereof, and no additional cash will be paid in
lieu of any principal amount of the New Notes not received as a
result of such rounding down. The table below sets forth
the Exchange Consideration for the Exchange Offer.
Title of Security |
TotalPrincipalAmount
Tendered |
Exchange Consideration(1) |
Cash |
New 2026 Notes(2) |
New 2040 Notes(2) |
8.000% Senior Notes due 2019 |
$ |
170,226,000 |
$ |
155.7928871 |
$ |
532.3092185 |
$ |
529.5386721 |
(1) Per $1,000 principal amount of Existing Notes that are
accepted for exchange.(2) The aggregate amount of each series
of New Notes forming part of the Exchange Consideration to be
received by each participating Holder will be rounded down, if
necessary, to $2,000 or the nearest whole multiple of $1,000 in
excess thereof.
The Company also announced that (in accordance with the
financing condition described in the Offering Memorandum), on
January 29, 2018, it entered into agreements providing for the
previously announced financing arrangements with affiliates of GSO
Capital Partners LP, which include: (i) a senior unsecured term
loan credit facility of $132.5 million of initial term loans and up
to $80.0 million of delayed draw term loans and (ii) a senior
secured first lien revolving credit facility of up to $125.0
million of senior secured first priority revolving loans
(collectively, the “Financing Arrangements”). Borrowings under the
Financing Arrangements will be available on the dates and subject
to the terms and conditions set forth therein.
This announcement does not constitute an offer to sell or the
solicitation of an offer to buy the New Notes, the Existing 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
Exchange Offer was made solely on the terms and subject to the
conditions set forth in the Exchange Offer Documents and the
information in this press release is qualified by reference to such
Exchange 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. 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) other factors described in detail
in the Company’s Annual Report on Form 10-K for the fiscal year
ended October 31, 2017, and in the Offering Memorandum. 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:
Jeffrey T. O’Keefe
Vice President of Investor Relations
732-747-7800
Ethan Lyle
Teneo Strategy
212-886-9376
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