By Rebecca Melvin
New York, Sept. 20 - K. Hovnanian Enterprises Inc., a subsidiary of Hovnanian Enterprises Inc., priced $90 million of five-year exchangeable note units at par of $1,000 to yield 6%, with an initial conversion premium of 40%, according to a term sheet.
Pricing of the registered offering came at the cheap end of the 5.5% to 6% yield talk and at the rich end of the 35% to 40% premium talk.
The deal has a $10 million greenshoe, and was sold via joint book-running managers J.P. Morgan Securities LLC, Citigroup Global Markets Inc. and Credit Suisse Securities (USA) LLC.
Concurrently, K. Hovnanian priced $577 million of 7.25% senior secured first lien notes due 2020 and $220 million of 9.125% senior secured second lien notes due 2020.
Each unit consists of a zero-coupon senior exchangeable note due Dec. 1, 2017, valued at $768.51, and a senior amortizing note due Dec. 1, 2017, valued at $231.49.
The exchangeable notes are non-callable and have no puts.
Proceeds from the offerings are earmarked to fund a tender offer and consent solicitation for Hovnanian's 10.625% senior secured notes due 2016.
Hovnanian is a homebuilder based in Red Bank, N.J.
| Issuer: | K. Hovnanian Enterprises Inc.
|
| Guarantor: | Hovnanian Enterprises Inc.
|
| Issue: | Exchangeable note units
|
| Amount: | $90 million
|
| Greenshoe: | $10 million
|
| Maturity: | Dec. 1, 2017
|
| Concurrent offerings: | $577 million of 7.25% senior secured first lien notes due 2020 and $220 million of 9.125% senior secured second lien notes due 2020
|
| Coupon: | 6%
|
| Price: | $1,000
|
| Yield: | 6%
|
| Initial conversion premium: | 40%
|
| Initial conversion price: | $5.39
|
| Initial exchange rate: | 185.5288
|
| Joint book-running managers: | J.P. Morgan Securities LLC, Citigroup Global Markets Inc. and Credit Suisse Securities (USA) LLC Co-managers:
|
| Calls: | Non-callable
|
| Puts: | No puts
|
| Takeover protection: | Yes
|
| Distribution: | Registered
|
| Price talk: | 5.5%-6%, up 35%-40%
|
| Price date: | Sept. 19
|
| Settlement: | Oct. 2
|
| Stock symbol: | NYSE: HOV
|
| Stock reference price: | $3.85
|
| Market capitalization: | $508 million
|
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