Hovnanian Enterprises extends $125 million secured revolver to 2026

By Mary-Katherine Stinson

Lexington, Ky., Sept. 25 – On Sept. 25 Hovnanian Enterprises, Inc. and wholly owned subsidiary K. Hovnanian Enterprises, Inc. entered into an agreement with existing lenders to amend and extend their $125 million secured revolving credit facility dated Oct. 31, 2019, according to an 8-K filing with the Securities and Exchange Commission and a press release.

The third amendment extended the final scheduled maturity by two years to June 30, 2026 upon the satisfaction of customary closing conditions.

The amendment also increased the interest rate floor. Borrowings under the revolver will now bear interest at term SOFR, subject to a floor of 3%, plus an applicable margin of 450 basis points.

Previously the interest rate floor was 1%.

In addition, K. Hovnanian will pay an unused commitment fee on the undrawn revolving commitments at a rate of 100 bps annually.

“This refinancing significantly enhances our balance sheet and reduces risk,” said chairman of the board, president and chief executive officer Ara K. Hovnanian in the press release.

“We have taken significant steps to strengthen our balance sheet, including reducing our total debt by $668 million since the beginning of fiscal 2020. This refinancing transaction will extend maturities of all of our secured debt maturing in fiscal 2026 by a few years, with minimal impact to annual interest incurred. In addition, we will extend the maturity of our revolving credit facility by two years.

“As we move forward, we will continue to focus on both growing our land position to increase profitability and further repairing our balance sheet by growing equity and reducing debt,” Hovnanian said.

The amendment is part of a series of transactions that extends the maturities of over $600 million of the company’s secured debt to the fourth quarters of fiscal 2028 and fiscal 2029. It includes the issuance through a private placement of $655 million of new senior secured 1.125-lien notes due 2028 and 1.25-lien notes 2029 and the redemption of all outstanding amounts of four series of existing secured notes.

The transactions are expected to close on Oct. 5.

Hovnanian is a Matawan, N.J., homebuilder.

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