Hovnanian (HOV) Subsidiary Commences Cash Tender Offers for Unsecured Senior and Senior Subordinated Notes

June 22, 2009 7:58 AM EDT

Hovnanian Enterprises, Inc. (NYSE: HOV) announced that its wholly owned subsidiary, K. Hovnanian Enterprises, Inc., has commenced cash tender offers for (i) any and all of its outstanding $28,870,000 6% Senior Subordinated Notes due 2010 at a fixed purchase price described below, (ii) the maximum aggregate principal amount of its 8% Senior Notes due 2012 ($88,174,000 outstanding), 8-7/8% Senior Subordinated Notes due 2012 ($70,935,000 outstanding) and 7-3/4% Senior Subordinated Notes due 2013 ($96,225,000 outstanding) that it can purchase for $40.0 million at a purchase price determined in accordance with the procedures of a modified "Dutch Auction" as described below and (iii) the maximum aggregate principal amount of its 6-1/2% Senior Notes due 2014 ($144,149,000 outstanding), 6-3/8% Senior Notes due 2014 ($115,313,000 outstanding), 6-1/4% Senior Notes due 2015 ($135,403,000 outstanding), 6-1/4% Senior Notes due 2016 ($182,405,000 outstanding), 7-1/2% Senior Notes due 2016 ($196,652,000 outstanding) and 8-5/8% Senior Notes due 2017 ($207,178,000 outstanding) that it can purchase for $20.0 million at a purchase price determined in accordance with the procedures of a modified "Dutch Auction" as described below.

Each Tender Offer will expire at 8:00 a.m., New York City time, on July 20, 2009, unless extended or earlier terminated. Holders of Notes must validly tender and not withdraw their Notes on or prior to 5:00 p.m., New York City time, on July 2, 2009, unless extended, in order to receive the Total Consideration (as described below) for their Notes. The Total Consideration includes an early participation payment of $30.00 for each $1,000 principal amount of Notes validly tendered on or before the Early Participation Date and accepted in the applicable Tender Offer. Holders validly tendering their Notes after the Early Participation Date and on or prior to the Expiration Date will only be eligible to receive the Tender Offer Consideration for such Notes, which is equal to the Total Consideration for such Notes less the Early Participation Payment. Notes tendered may be withdrawn at any time prior to 5:00 p.m., New York City time, on July 2, 2009, unless extended but not thereafter.

2010 Tender Offer

Holders who validly tender and do not validly withdraw their 2010 Notes prior to the Early Participation Date, will be entitled to receive the Total Consideration of $985, payable in cash, for each $1,000 principal amount of 2010 Notes accepted for purchase, which amount includes the Early Participation Payment. Holders who validly tender their 2010 Notes after the Early Participation Date but prior to the Expiration Date will receive the Tender Offer Consideration of $955 per $1,000 principal amount of 2010 Notes accepted for purchase but will not receive the Early Participation Payment.

Dutch Tender Offers

The Total Consideration payable to holders who validly tender and do not validly withdraw their Dutch Notes on or prior to the Early Participation Date will be determined based on a formula consisting of a "base price" per $1,000 principal amount of Dutch Notes, plus a "clearing premium" to be determined pursuant to the modified "Dutch Auction." Holders validly tendering their Dutch Notes after the Early Participation Date and on or prior to the Expiration Date will only be eligible to receive the Tender Offer Consideration for their Dutch Notes, which is equal to the Total Consideration for such Dutch Notes less the Early Participation Payment.

The clearing premium will be determined by consideration of the "bid price" specified by each holder that tenders Dutch Notes into the applicable Dutch Tender Offer, which represents the minimum Total Consideration such holder is willing to receive for those Dutch Notes.

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