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Hovnanian greenshoe lifts convertible equity units to $86.25 million
By Melissa Kory
Cleveland, Feb. 15 - Hovnanian Enterprises, Inc.'s underwriters exercised the over-allotment option for an additional $11.25 million, or 450,000, of 7.25% tangible equity units, lifting the completed offering to $86.25 million, or 3 million units, according to an 8-K filed with the Securities and Exchange Commission.
Hovnanian priced $75 million of the three-year convertible tangible equity units on Feb. 3 at par of $25.00 to yield 7.25% with a 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.
The registered, off-the-shelf convertible was priced concurrently with about $50.5 million of common stock at $4.30 per share and $155 million of 11 7/8% notes due 2015.
Underwriters also exercised an over-allotment option for $7,578,750, or 1,762,500, of the class A common stock, lifting the offering to $58,103,750, or 13,512,500 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.
JPMorgan, Credit Suisse, Merrill Lynch, Pierce, Fenner & Smith Inc. and Citigroup were the underwriters for the common stock.
Proceeds of the offerings were used to repurchase $24.6 million of K. Hovnanian's 8% senior notes due 2012, $44.1 million of its 8.875% senior subordinated notes due 2012 and $29.2 million of its 7.75% senior subordinated notes due 2013 via tender offers. Remaining proceeds will be used for general corporate purposes.
Hovnanian is a homebuilder based in Red Bank, N.J.
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