By Wendy Van Sickle
Columbus, Ohio, Feb. 2 – Hovnanian Enterprises, Inc. wholly owned subsidiary K. Hovnanian Enterprises, Inc. issued $90.59 million 13½% senior notes due Feb. 1, 2026 and $90.12 million 5% senior notes due Feb. 1, 2040 on Thursday, to settle its recent exchange offer for its 8% notes due 2019, according to an 8-K filing with the Securities and Exchange Commission.
As previously reported, holders tendered for exchange $170,226,000, or 72.14%, of the 8% senior notes under the offer, which ended at 11:59 p.m. ET on Jan. 29. All of the tenders were accepted.
As announced Dec. 28, Hovnanian held a private offer to exchange up to $185 million of the 8% notes for cash, new 13½% senior notes due 2026 and new 5% senior notes due 2040.
In exchange for each $1,000 principal amount, Hovnanian said it would pay $155.7928871 in cash and issue $532.3092185 of new 2026 notes and $529.5386721 of new 2040 notes.
Holders were to receive the following in exchange for each $1,000 principal amount:
• A cash amount equal to the product of $1,000 multiplied by the quotient of $26 million divided by the total principal amount of the existing notes tendered in the exchange offer;
• An additional amount in cash equal to the product of the cash amount described above multiplied by 0.02000;
• A principal amount of new 2026 notes equal to the product of the difference of $1,000 minus the cash amount multiplied by 0.62827; and
• A principal amount of new 2040 notes equal to the product of the difference of $1,000 minus the cash amount multiplied by 0.62500.
Holders were not offered accrued interest.
As previously announced, an aggregate of $26 million principal amount of the existing notes that are tendered was to be purchased by K. Hovnanian at Sunrise Trail III, LLC, one of the issuer’s wholly owned subsidiaries. The subsidiary purchaser was responsible for the cash component of the exchange consideration to be paid in connection with the exchange offer.
The indenture governing the new 2026 notes and 2040 notes contains limitations on actions with respect to 8% notes purchased by K. Hovnanian at Sunrise Trail. Prior to June 6, K. Hovnanian may not redeem any purchased 8% notes or make any interest payments on those notes prior to their maturity. Also, K. Hovnanian may not sell, transfer or amend those notes. In addition, under the indenture governing the new notes, at all times on or after June 6 and prior to the notes’ stated maturity, K. Hovnanian at Sunrise Trail must continue to own and hold at least the minimum denomination of those notes.
Hovnanian Enterprises is a homebuilder based in Red Bank, N.J.
| Issuer: | K. Hovnanian Enterprises, Inc.
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| Issue: | Senior notes
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| Amount: | $180. 71 million
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| Issue date: | Feb. 1
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| 2026 notes
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| Amount: | $90.59 million
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| Coupon: | 13½%
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| Maturity: | Feb. 1, 2026
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| 2040 notes
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| Amount: | $90.12 million
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| Coupon: | 5%
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| Maturity: | Feb. 1, 2040
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