K. Hovnanian solicits consents for two notes series to allow more debt

By Toni Weeks

San Luis Obispo, Calif., Sept. 11 – Hovnanian Enterprises, Inc. subsidiary K. Hovnanian Enterprises, Inc. began a consent solicitation on Thursday to amend each of the indentures governing its $577 million of 7¼% senior secured first-lien notes due 2020 and $220 million of 9 1/8% senior secured second-lien notes due 2020, according to a press release.

Holders of record as of 5 p.m. ET on Sept. 10 may participate in the consent solicitation, which will expire at 5 p.m. ET on Sept. 22.

Holders who deliver consents to the applicable proposed amendments will be eligible to receive a consent payment of $2.50 per $1,000 principal amount of notes. The consent fee will be paid “as promptly as practicable” after the satisfaction or waiver of the conditions to the solicitations.

The purpose of the consent solicitations is to obtain holder approval to modify the definition of “permitted indebtedness” in each indenture, which would allow K. Hovnanian and its restricted subsidiaries to incur additional debt of up to $300 million.

Neither of the consent solicitations is dependent upon the results of the other, and neither is conditioned upon the raising of any debt. Adoption of the proposed amendments will not provide the company with additional secured debt capacity under either indenture, according to the release.

The consent solicitations are dependent on the receipt of at least a majority in principal amount of the outstanding notes of the applicable series and the execution of a supplemental indenture for each note series.

Consents may be revoked prior to the execution and effectiveness of each supplemental indenture.

J.P. Morgan Securities LLC (212 270-1200 or 800 245-8812, attn: liability management group), Citigroup Global Markets Inc. (212 723-6106 or 800 558-3745, attn: liability management group) and Credit Suisse Securities (USA) LLC (212 325-2476 or 800 820-1653, attn: liability management group) are the solicitation agents. Global Bondholder Services Corp. (212 430-3774 or 866 470-4200) is the information and tabulation agent.

The Red Bank, N.J.-based company designs, constructs, markets and sells townhomes, condominiums and single-family homes.

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