By Paul A. Harris
Portland, Ore., July 14 – Hovnanian Enterprises, Inc. priced $840 million of senior secured notes (Caa2/CCC+) in two tranches on Friday, according to a syndicate source.
The deal included $440 million of five-year notes, which priced at par to yield 10%. The yield printed at the wide end of the 9¾% to 10% yield talk and wide of early guidance in the 8% area.
In addition Hovnanian priced $400 million of seven-year notes at par to yield 10½%. The yield printed at the wide end of the 10¼% to 10½% yield talk and wide of initial guidance in the 9% area.
The issuing entity is subsidiary K. Hovnanian Enterprises, Inc.
Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC were the joint bookrunners for the transaction, which was conducted on the investment-grade syndicate desk.
The notes will be secured by liens on substantially all the assets of K. Hovnanian and will rank junior to the liens securing K. Hovnanian's $75 million senior secured term loan facility.
The Red Bank, N.J.-based homebuilder plans to use the proceeds to fund the purchase of $75 million 10% senior secured second-lien notes due 2018, $145 million 9 1/8% senior secured second-lien notes due 2020 and $577 million 7¼% senior secured first-lien notes due 2020, all issued by K. Hovnanian.
| Issuer: | K. Hovnanian Enterprises, Inc.
|
| Amount: | $840 million
|
| Securities: | Senior secured notes
|
| Bookrunners: | Citigroup Global Markets Inc., Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC
|
| Trade date: | July 14
|
| Settlement date: | July 27
|
| Ratings: | Moody's: Caa2
|
| S&P: CCC+
|
| Distribution: | Rule 144A and Regulation S
|
| Marketing: | Roadshow
|
|
|
| Five-year notes
|
| Amount: | $440 million
|
| Maturity: | July 15, 2022
|
| Coupon: | 10%
|
| Price: | Par
|
| Yield: | 10%
|
| Call protection: | Two years
|
| Price talk: | 9¾% to 10%
|
|
|
| Seven-year notes
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| Amount: | $400 million
|
| Maturity: | July 15, 2024
|
| Coupon: | 10½%
|
| Price: | Par
|
| Yield: | 10½%
|
| Call protection: | Three years
|
| Price talk: 10 ¼% to 10 ½%
|
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