Hovnanian to exchange 2022, 2024 notes for $158.5 million 2025 notes

By Marisa Wong

Los Angeles, Dec. 6 – Hovnanian Enterprises, Inc. wholly owned subsidiary K. Hovnanian Enterprises, Inc. announced the results of its private offers to exchange its $218,994,000 10% senior secured notes due 2022 and its $211,391,000 10½% senior secured notes due 2024 for up to $240 million of newly issued 10% 1.75-lien notes due 2025 and the related consent solicitations

As of the expiration of the offers at 11:59 p.m. ET on Dec. 5, holders had tendered $23,152,000, or 10.6%, of the old 2022 notes and $141,708,000, or 67%, of the old 2024 notes. Those notes will be accepted, without proration, for exchange for $158,502,000 of new 2025 notes, according to a Friday press release.

As previously announced, the company will issue in exchange for every $1,000 of old notes due 2022, $1,005 principal amount of new 2025 notes, and for every $1,000 of old notes due 2024, $955 principal amount of new 2025 notes.

The consideration includes a $5 early exchange premium for notes tendered by 5 p.m. ET on Nov. 18, the early deadline.

Holders will also receive accrued interest.

Settlement is expected to be on Dec. 10.

In addition, the company received the necessary consents from holders of the old 2024 notes to adopt the proposed amendments to the indenture governing those notes. No additional consideration is being paid for the consents, the company noted.

The company did not receive the required consents to amend the old 2022 notes.

As announced on Nov. 4, in conjunction with the exchange offers, the issuer solicited consents to proposed amendments from the holders of the old 2022 and 2024 notes to eliminate most of the restrictive covenants, some of the affirmative covenants and some of the events of default in the indentures.

The company also announced on Friday that it expects to exchange some of its outstanding unsecured debt for up to $81,498,000 of debt that is secured on a pari passu basis with the 2025 notes. That amount is equal to the exchange offer cap less the amount of new 2025 notes to be issued in the exchange offers. The terms of the new pari passu debt may differ from the new 2025 notes, the issuer noted.

Global Bondholder Services Corp. (866 470-3800 or 212 430-3774) is the exchange agent and information agent.

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

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