Hovnanian to redeem 9 1/8% notes

New York, March 29 - Hovnanian Enterprises Inc. (Ba2/BB) said that its K. Hovnanian Enterprises Inc. subsidiary will redeem all of its $150 million of outstanding 9 1/8% senior notes due 2009.

The notes will be redeemed on May 1 at a redemption price of 104.563% of principal amount plus accrued interest. The redemption will result in a pre-tax charge in Hovnanian's 2004 third quarter of $8.7 million (16 cents per diluted share). The charge represents the call premium and the write-off of unamortized debt issuance costs.

Hovnanian, a Red Bank, N.J.-based homebuilder, will fund the redemption using a portion of the proceeds from its recent sale of 10-year senior notes (Hovnanian priced $150 million 6 3/8% notes due 2014 at 99.057 on Feb. 26 and completed the offering on March 18. The notes, issued by K. Hovnanian Enterprises Inc. are guaranteed by Hovnanian Enterprises Inc. and most of the company's current and future restricted subsidiaries).

Besides the redemption of the 9 1/8% notes, the remainder of the proceeds will be used for general corporate purposes.

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