Hovnanian Enterprises, Inc. (NYSE: HOV) (the “Company”) announced
today that its wholly-owned subsidiary, K. Hovnanian Enterprises,
Inc. (the “Issuer”), has amended certain terms of its previously
announced offers to exchange (the “Exchange Offers”) its
outstanding 10.000% senior secured notes due 2022 (the “Old 2022
Notes”) and outstanding 10.500% senior secured notes due 2024 (the
“Old 2024 Notes” and, together with the Old 2022 Notes, the “Old
Notes”) for up to $240,000,000 aggregate principal amount (the “New
Notes Cap”) of 10.000% 1.75 Lien Notes due 2025 (the “New 2025
Notes”) to be issued by the Issuer and guaranteed by the Company
and substantially all of its subsidiaries, other than the Issuer,
its home mortgage subsidiaries, certain of its title insurance
subsidiaries, joint ventures and subsidiaries holding interests in
joint ventures (collectively, the “Guarantors”) and related
solicitations of consents from holders of the Old Notes to certain
proposed amendments to the indenture governing the Old Notes (the
“Consent Solicitations”), which Exchange Offers and Consent
Solicitations are being made on the terms and subject to the
conditions set forth in the Confidential Offering Memorandum and
Consent Solicitation Statement, dated November 4, 2019 (as amended
by the Confidential Supplement, dated November 21, 2019, and as may
be further amended or supplemented from time to time, the “Offering
Memorandum”). Additionally, the Company and the Issuer announced
today that the early participation date had passed and the
withdrawal deadline had expired for the Exchange Offers at 5:00
p.m., New York City time, on November 18, 2019.
The Exchange Offers and the Consent
Solicitations will expire at 11:59 p.m., New York City time, on
December 5, 2019, unless extended or earlier terminated by the
Issuer.
The amendment to the Exchange Offers amends the
definition of “Permitted Indebtedness” in the indenture governing
the New 2025 Notes to clarify the allocation of New 2025 Notes
issued in the Exchange Offers and in exchange for unsecured debt
obligations.
The amendments to the Consent Solicitations (i)
remove all references to the asset dispositions covenant being
eliminated as part of the Consent Solicitations for the applicable
series of Old Notes, and (ii) clarify that the proposed amendments
under each of the Consent Solicitations will not affect the
obligation of subsidiaries that are Guarantors on the effective
date of the applicable Supplemental Indenture giving effect to the
applicable proposed amendments to continue to grant their assets as
collateral for the Old Notes.
In addition, the Company and the Issuer
announced that, if New 2025 Notes are issued in an amount less than
the New Notes Cap, then in connection with the completion of the
Exchange Offers, the Issuer expects to exchange certain of its
outstanding unsecured indebtedness for debt that is secured on a
pari passu basis with the New 2025 Notes (the “New Pari Passu
Debt”) to be issued or borrowed by the Issuer and guaranteed by the
Guarantors in an aggregate principal amount not to exceed the
amount equal to the New Notes Cap less the amount of New 2025 Notes
issued in the Exchange Offers. The terms of the New Pari Passu Debt
may differ from the New 2025 Notes.
Other than the amendments described above, the
terms of the Exchange Offers and Consent Solicitations remain the
same as set forth in the Offering Memorandum.
None of us, the Dealer Manager (as
defined below), the Exchange Agent, the Information Agent or any
other person is making any recommendation as to whether or not you
should tender your Old Notes for exchange in the Exchange Offers,
or provide consents in the Consent Solicitations. You must make
your own decision whether to tender your Old Notes in the Exchange
Offers and provide consents in the Consent Solicitations, and, if
so, the amount of your Old Notes to tender.
Global Bondholder Services Corporation is
serving as the exchange agent and information agent for the
Exchange Offers. Any question regarding the Exchange Offers or the
Consent Solicitations or the procedures for tendering Old Notes and
requests for copies of the Offering Memorandum may be directed to
Global Bondholder Services by phone at 866-470-3800 (toll free) or
212-430-3774.
This press release is neither an offer to
purchase or sell nor a solicitation of an offer to sell or buy the
Old Notes, the New 2025 Notes or any other securities of the Issuer
or the Company, including any securities to be offered to the
holders of the unsecured term loan, nor shall there be any such
offer, solicitation or sale in any state or other jurisdiction in
which such an offer, solicitation or sale would be unlawful. This
press release also is not a solicitation of consents to the
Proposed Amendments to the indenture governing the Old Notes. The
Exchange Offers are being made solely on the terms and subject to
the conditions set forth in the Offering Memorandum and the
information in this press release is qualified by reference to such
Offering Memorandum.
The New 2025 Notes have not been and will not be
registered under the U.S. Securities Act of 1933, as amended (the
“Securities Act”), or with any securities regulatory authority of
any State or other jurisdiction. The Exchange Offers will only be
made, and the New 2025 Notes are only being offered and will only
be issued, to holders of Old Notes either (a) in the United States,
that are “qualified institutional buyers,” as that term is defined
in Rule 144A under the Securities Act, in a private transaction in
reliance upon an exemption from the registration requirements of
the Securities Act or (b) (i) outside the United States, that are
persons other than “U.S. persons,” as that term is defined in Rule
902 under the Securities Act, in offshore transactions in reliance
upon Regulation S under the Securities Act, (ii) if located or
resident in any Member State of the European Economic Area which
has implemented Directive 2003/71/EC, as amended (the “Prospectus
Directive”), who are “Qualified Investors” as defined under the
Prospectus Directive and (iii) if located or resident in Canada, is
an “accredited investor” as defined in National Instrument 45- 106
– Prospectus Exemptions (“NI 45-106”) or section 73.3(1) of the
Securities Act (Ontario) and is a “permitted client” as defined in
National Instrument 31-103 - Registration Requirements, Exemptions
and Ongoing Registrant Obligations (“NI 31-103”).
Documents relating to the Exchange Offers will
be distributed only to holders of Old Notes who complete a letter
of eligibility confirming that they are within the category of
holders that are eligible to participate in this private offer.
Additionally, holders of Old Notes that are resident in Canada are
required to complete, sign and submit a Canadian eligibility
form. To access these documents, click on the following link:
http://gbsc-usa.com/eligibility/khov.
ABOUT HOVNANIAN
ENTERPRISES, INC.: |
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Hovnanian Enterprises, Inc., founded in 1959 by
Kevork S. Hovnanian, is headquartered in Matawan, New Jersey and,
through its subsidiaries, 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 name K. Hovnanian® Homes. Additionally, the Company’s
subsidiaries, as developers of K. Hovnanian’s® Four Seasons
communities, make the Company 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
significant homebuilding downturn; (2) adverse weather and other
environmental conditions and natural disasters; (3) high leverage
and restrictions on the Company’s operations and activities imposed
by the agreements governing the Company’s outstanding indebtedness;
(4) availability and terms of financing to the Company; (5) the
Company’s sources of liquidity; (6) changes in credit ratings; (7)
the seasonality of the Company’s business; (8) the availability and
cost of suitable land and improved lots and sufficient liquidity to
invest in such land and lots; (9) shortages in, and price
fluctuations of, raw materials and labor; (10) reliance on, and the
performance of, subcontractors; (11) 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; (12) fluctuations in
interest rates and the availability of mortgage financing; (13)
increases in cancellations of agreements of sale; (14)
changes in tax laws affecting the after-tax costs of owning a home;
(15) operations through unconsolidated joint ventures with third
parties; (16) government regulation, including regulations
concerning development of land, the home building, sales and
customer financing processes, tax laws and the environment; (17)
legal claims brought against us and not resolved in our favor, such
as product liability litigation, warranty claims and claims made by
mortgage investors; (18) levels of competition; (19) successful
identification and integration of acquisitions; (20) significant
influence of the Company’s controlling stockholders; (21)
availability of net operating loss carryforwards; (22) utility
shortages and outages or rate fluctuations; (23) changes in trade
policies, including the imposition of tariffs and duties on
homebuilding materials and products, and related trade disputes
with and retaliatory measures taken by other countries; (24)
geopolitical risks, terrorist acts and other acts of war; (25) loss
of key management personnel or failure to attract qualified
personnel; (26) information technology failures and data security
breaches; (27) negative publicity; and (28) 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, 2018 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: |
J. Larry Sorsby |
Jeffrey T. O’Keefe |
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Executive Vice President & CFO |
Vice President, Investor Relations |
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732-747-7800 |
732-747-7800 |
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