Hovnanian Enterprises, Inc. (NYSE:HOV) (“Hovnanian” or the
“Company”) announced today that it has closed its previously
announced financing transactions with GSO Capital Partners LP
(“GSO”), Blackstone’s credit platform (NYSE:BX), and certain funds
managed or advised by it.
As part of such financing transactions, the Company’s
wholly-owned subsidiary, K. Hovnanian Enterprises, Inc. (“K.
Hovnanian”), accepted all of the $170,226,000 aggregate principal
amount of the 8.000% Senior Notes due 2019 (the “8% 2019 Notes”)
tendered in its previously announced exchange offer (the “Exchange
Offer”) with respect to the 8% 2019 Notes (representing 72.14% of
the aggregate principal amount outstanding prior to the Exchange
Offer). In connection therewith, on February 1, 2018, K. Hovnanian
issued $90,590,000 aggregate principal amount of its 13.5% Senior
Notes due 2026 and $90,120,000 aggregate principal amount of its
5.0% Senior Notes due 2040 pursuant to an Indenture, dated as of
February 1, 2018, by and among K. Hovnanian, the Company, the other
guarantors named therein and the trustee named therein. In
addition, K. Hovnanian at Sunrise Trail III, LLC, a wholly-owned
subsidiary of Hovnanian, purchased for $26,519,999.96 in cash, as
part of the Exchange Offer, $26,000,000 aggregate principal amount
of the 8% 2019 Notes, in accordance with the previously disclosed
terms of the Exchange Offer.
In addition, as previously announced, K. Hovnanian and the
Company entered into credit agreements, dated January 29, 2018,
with GSO and certain funds managed or advised by it that provide
for (i) a senior unsecured term loan credit facility, consisting of
$132.5 million of initial term loans, and up to $80.0 million of
delayed draw term loans available to refinance 8% 2019 Notes that
remain outstanding following the consummation of the Exchange Offer
and (ii) a senior secured first lien revolving credit facility of
up to $125.0 million of senior secured first priority revolving
loans to refinance its current $75 million first priority secured
term loan and for general corporate purposes. On February 1, 2018,
K. Hovnanian closed on the borrowing of $132.5 million of initial
term loans, the proceeds of which were used to redeem, on February
1, 2018, all of K. Hovnanian’s outstanding $132,546,000 aggregate
principal amount of 7.000% Senior Notes due 2019. Other borrowings
under these credit facilities will be available on the dates and
subject to the terms and conditions set forth therein.
“We are pleased to have successfully closed this transaction and
with significant participation in the exchange offer,” stated Ara
K. Hovnanian, Chairman of the Board, President and Chief Executive
Officer. “This refinancing will provide us with much-needed
financial flexibility and additional liquidity to help continue
growing our business. Not only do the refinancing agreements push
out our 2019 maturities at favorable rates, but GSO has also
provided us with a $125 million credit facility to refinance our
$75 million term loan in September of 2018 and for general
corporate purposes and a commitment to purchase $25 million of
additional 10.5% senior secured notes to be issued in January 2019.
Our plan continues to be to use cash to pay off our unsecured
revolving credit facility at its maturity dates in 2018. Since our
next significant maturity is not until the end of 2021, we will be
focusing with increased concentration on reloading our land
position, executing to our business plan and further improving our
operating results.”
About Hovnanian Enterprises, Inc.
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” within
the meaning of the “Safe Harbor” provisions of the Private
Securities Litigation Reform Act of 1995. 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, 2017 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.
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Contact: |
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Jeffrey T. O’KeefeVice
President of Investor Relations732-747-7800 |
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Ethan LyleTeneo
Strategy212-886-9376 |
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