Hovnanian subsidiary launches tender offers for nine series of notes

By Angela McDaniels

Tacoma, Wash., June 22 - Hovnanian Enterprises, Inc. subsidiary K. Hovnanian Enterprises Inc. has begun a fixed-price tender offer for its $28.87 million of 6% senior subordinated notes due 2010 and Dutch auction tender offers for eight additional series of notes, according to a company news release.

Under one Dutch auction tender offer, the company is offering to buy the maximum principal amount of its $88,174,000 of 8% senior notes due 2012, $70,935,000 of 8 7/8% senior subordinated notes due 2012 and $96,225,000 of 7¾% senior subordinated notes due 2013 that it can purchase for $40 million.

In the other, K. Hovnanian is offering to buy the maximum principal amount of its $144,149,000 of 6½% senior notes due 2014, $115,313,000 of 6 3/8% senior notes due 2014, $135,403,000 of 6¼% senior notes due 2015, $182,405,000 of 6¼% senior notes due 2016, $196,652,000 of 7½% senior notes due 2016 and $207,178,000 of 8 5/8% senior notes due 2017 that it can purchase for $20 million.

Each offer will expire at 8 a.m. ET on July 20, and the early participation date for each offer is 5 p.m. ET on July 2.

Holders who tender by the early participation date will receive the total tender consideration, which includes an early participation payment of $30 for each $1,000 principal amount of notes.

All holders who tender will receive accrued interest up to but excluding the payment date.

Fixed-price offer

The payment on offer for the 6% notes due 2010 is $985 for each $1,000 principal amount of notes, including the early participation payment.

Holders who tender after the early participation date but prior to the expiration date will receive $955 per $1,000 principal amount of notes.

Dutch tender offers

The total amount payable to holders will be determined based on a formula consisting of a base price per $1,000 principal amount of notes plus a clearing premium to be determined through the modified Dutch auction.

In the first Dutch auction tender offer, holders who tender should specify a bid price of between $650 and $750 for the 8% notes, between $500 and $600 for the 8 7/8% notes and between $400 and $500 for the 7¾% notes.

In the second Dutch auction tender offer, holders who tender should specify a bid price of between $480 and $580 per note.

The clearing premium will be the lowest single premium such that for all notes tendered at or below this single lowest premium, K. Hovnanian will be able to purchase the greatest principal amount of notes for $40 million in the case of the first offer and $20 million in the case of the second offer.

The tender offers are conditioned on the satisfaction of some customary conditions. They are not conditioned on financing, any minimum amount of notes being tendered or the consummation of any of the other tender offers.

The dealer managers are Citi (800 558-3745 or 212 723-6106), Banc of America Securities LLC (888 292-0070 or 980 388-9217) and Wachovia Securities (866 309-6316 or 704 715-8341).

Bondholder Communications Group (888 385-2663) is the information agent.

Hovnanian is a homebuilder based in Red Bank, N.J.

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