Hovnanian (HOV) Reports Results of Senior Notes Exchange Offer
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Hovnanian Enterprises, Inc. (NYSE: HOV) announced today the results of the private offers to exchange senior notes (collectively, the "Senior Notes") for new 5.00% Senior Secured Notes due 2021 (the "5.00% New Secured Notes") and new 2.00% Senior Secured Notes due 2021 (the "2.00% New Secured Notes," and together with the 5.00% New Secured Notes, the "New Secured Notes") to be issued in a private placement by K. Hovnanian Enterprises, Inc., a wholly-owned subsidiary of the Company ("K. Hovnanian"), and to be guaranteed by the Company and substantially all of its restricted subsidiaries. The New Secured Notes will be secured by a first-priority lien on the assets of certain subsidiaries that are "unrestricted subsidiaries" under K. Hovnanian's existing indentures. The 5.00% New Secured Notes and 2.00% New Secured Notes will be issued as separate series under an indenture, but will have substantially the same terms other than with respect to interest rate and related redemption provisions, and will vote together as a single class.
The exchange offers expired at 12:00 midnight, New York City time, on October 29, 2011 (the "Expiration Time"). As of the Expiration Time, the following amounts of 2014 Notes and 2015 Notes (each as defined below) had been properly tendered (and not validly withdrawn) and will be accepted (without proration) for exchange into approximately $141.8 million aggregate principal amount of 5.00% New Secured Notes: $16.7 million in aggregate principal amount, or 31.33%, of the 6 1/2% Senior Notes due 2014 (the "6 1/2% 2014 Notes"); $26.2 million in aggregate principal amount, or 89.68%, of the 6 3/8% Senior Notes due 2014 (the "6 3/8% 2014 Notes," and together with the 6 1/2% 2014 Notes, the "2014 Notes"); $31.3 million in aggregate principal amount, or 59.34%, of the 6 1/4% Senior Notes due 2015 (the "6 1/4% 2015 Notes"); and $67.6 million in aggregate principal amount, or 51.83%, of the 11 7/8% Senior Notes due 2015 (the "11 7/8% 2015 Notes" or the "Any and All Tender Notes," and together with the 6 1/4% 2015 Notes, the "2015 Notes"). Pursuant to the terms set forth in the Confidential Offering Memorandum and Consent Solicitation Statement, as amended to date (the "Offering Memorandum"), holders of 2014 Notes and 2015 Notes will also receive on the Settlement Date (as defined below) a cash payment of $100 for each $1,000 principal amount of 2014 Notes and 2015 Notes that were properly tendered (and not validly withdrawn) and accepted for exchange (the "Cash Consideration"). The aggregate Cash Consideration payable upon consummation of the exchange offers is $14.2 million. In addition, as of the Expiration Time, the following amounts of 2016 Notes and 2017 Notes (each as defined below) had been properly tendered (and not validly withdrawn): $13.3 million in aggregate principal amount, or 7.69%, of the 6 1/4% Senior Notes due 2016 (the "6 1/4% 2016 Notes"); $20.7 million in aggregate principal amount, or 12.03%, of 7 1/2% Senior Notes due 2016 (the "7 1/2% 2016 Notes," and together with the 6 1/4% 2016 Notes, the "2016 Notes"); and $21.3 million in aggregate principal amount, or 10.89%, of the 8 5/8% Senior Notes due 2017 (the "2017 Notes"). Of the tendered 2016 Notes and 2017 Notes, all of the 2016 Notes tendered were accepted without proration, and $19.2 million of the $21.3 million in aggregate principal amount of the 2017 Notes tendered were accepted (representing a proration factor of 89.8%), because the Maximum New Issuance Amount (as defined in the Offering Memorandum) of $195.0 million was insufficient to accept all of the 2017 Notes tendered. The accepted 2016 Notes and 2017 Notes will be exchanged for approximately $53.2 million aggregate principal amount of 2.00% New Secured Notes. The settlement date for the exchange offers is expected to be November 1, 2011,
The exchange offers expired at 12:00 midnight, New York City time, on October 29, 2011 (the "Expiration Time"). As of the Expiration Time, the following amounts of 2014 Notes and 2015 Notes (each as defined below) had been properly tendered (and not validly withdrawn) and will be accepted (without proration) for exchange into approximately $141.8 million aggregate principal amount of 5.00% New Secured Notes: $16.7 million in aggregate principal amount, or 31.33%, of the 6 1/2% Senior Notes due 2014 (the "6 1/2% 2014 Notes"); $26.2 million in aggregate principal amount, or 89.68%, of the 6 3/8% Senior Notes due 2014 (the "6 3/8% 2014 Notes," and together with the 6 1/2% 2014 Notes, the "2014 Notes"); $31.3 million in aggregate principal amount, or 59.34%, of the 6 1/4% Senior Notes due 2015 (the "6 1/4% 2015 Notes"); and $67.6 million in aggregate principal amount, or 51.83%, of the 11 7/8% Senior Notes due 2015 (the "11 7/8% 2015 Notes" or the "Any and All Tender Notes," and together with the 6 1/4% 2015 Notes, the "2015 Notes"). Pursuant to the terms set forth in the Confidential Offering Memorandum and Consent Solicitation Statement, as amended to date (the "Offering Memorandum"), holders of 2014 Notes and 2015 Notes will also receive on the Settlement Date (as defined below) a cash payment of $100 for each $1,000 principal amount of 2014 Notes and 2015 Notes that were properly tendered (and not validly withdrawn) and accepted for exchange (the "Cash Consideration"). The aggregate Cash Consideration payable upon consummation of the exchange offers is $14.2 million. In addition, as of the Expiration Time, the following amounts of 2016 Notes and 2017 Notes (each as defined below) had been properly tendered (and not validly withdrawn): $13.3 million in aggregate principal amount, or 7.69%, of the 6 1/4% Senior Notes due 2016 (the "6 1/4% 2016 Notes"); $20.7 million in aggregate principal amount, or 12.03%, of 7 1/2% Senior Notes due 2016 (the "7 1/2% 2016 Notes," and together with the 6 1/4% 2016 Notes, the "2016 Notes"); and $21.3 million in aggregate principal amount, or 10.89%, of the 8 5/8% Senior Notes due 2017 (the "2017 Notes"). Of the tendered 2016 Notes and 2017 Notes, all of the 2016 Notes tendered were accepted without proration, and $19.2 million of the $21.3 million in aggregate principal amount of the 2017 Notes tendered were accepted (representing a proration factor of 89.8%), because the Maximum New Issuance Amount (as defined in the Offering Memorandum) of $195.0 million was insufficient to accept all of the 2017 Notes tendered. The accepted 2016 Notes and 2017 Notes will be exchanged for approximately $53.2 million aggregate principal amount of 2.00% New Secured Notes. The settlement date for the exchange offers is expected to be November 1, 2011,
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