By Rebecca Melvin
New York, Feb. 4 - Hovnanian Enterprises Inc. priced $75 million of three-year convertible tangible equity units late Thursday at par of $25.00 to yield 7.25% with a 22% initial conversion premium, according to a syndicate source.
The tangible equity units, or T-DEC product, came at the rich end of talk, which was for a 7.25% to 7.75% dividend and an 18% to 22% initial conversion premium.
The three-year convertible consists of an 80% prepaid stock purchase contract issued by Hovnanian and an amortizing note due 2014.
There is a greenshoe for $11.25 million of units.
The registered, off-the-shelf convertible was priced concurrently with $50.5 million of common stock at $4.30 per share and about $150 million of straight notes due 2015.
There is a 15% greenshoe on the common shares.
Credit Suisse Securities, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC were the joint bookrunners for the tangible equity units, with Bank of America Merrill Lynch, Deutsche Bank Securities Inc. and Wells Fargo Securities serving as the co-managers.
Proceeds of the offerings are earmarked to repurchase K. Hovnanian's 8% senior notes due 2012, 8.875% senior subordinated notes due 2012 and 7.75% senior subordinated notes due 2013 via tender offers for those securities. Remaining proceeds will be used for general corporate purposes.
Hovnanian will apply to list the tangible equity units on the New York Stock Exchange.
Hovnanian is a homebuilder based in Red Bank, N.J.
| Issuer: | Hovnanian Enterprises Inc.
|
| Issue: | Tangible equity units
|
| Bookrunners: | Credit Suisse Securities, Citigroup Global Markets Inc., J.P. Morgan Securities LLC
|
| Co-managers: | Bank of America Merrill Lynch, Deutsche Bank Securities Inc., Wells Fargo Securities
|
| Amount: | $75 million
|
| Greenshoe: | $11.25 million
|
| Maturity: | Feb. 15, 2014
|
| Concurrent offerings: | $50.5 million of common stock at $4.30 per share and about $150 million of straight notes
|
| Dividend: | 7.25%
|
| Price: | Par of $25.00
|
| Yield: | 7.25%
|
| Conversion premium: | 22%
|
| Initial conversion price: | $5.246
|
| Minimum conversion ratio: | 4.7655 shares
|
| Maximum conversion ratio: | 5.8140 shares
|
| Takeover protection: | Yes, via standard make-whole matrix
|
| Dividend protection: | Yes
|
| Price talk: | 7.25%-7.75%, up 18%-22%
|
| Pricing date: | Feb. 3
|
| Settlement date: | Feb. 9
|
| Distribution: | Registered, off the shelf
|
| Stock symbol: | NYSE: HOV
|
| Stock reference price: | $4.49
|
| Market capitalization: | $350.5 million
|
© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere.
For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.
