Published on 9/19/2012 in the Prospect News High Yield Daily.
New Issue: Hovnanian prices re-sized $797 million offering of eight-year notes in two parts
By Paul A. Harris
Portland, Ore., Sept. 19 - K. Hovnanian Enterprises, Inc. priced a re-sized $797 million two-part offering of senior secured notes on Wednesday, according to a syndicate source.
The transaction saw $27 million of proceeds shifted to the first-lien tranche from the second-lien tranche.
The deal included an upsized $577 million trance of first-lien notes (B3/CCC+), which priced at par to yield 7¼%. The trance was upsized from $550 million, and the yield printed on top of yield talk.
Hovnanian also priced a downsized $220 million tranche of second-lien notes (Caa2/CCC-) at par to yield 9 1/8%. The tranche was downsized from $247 million, and the yield printed at the tight end of price talk that had been set in the 9¼% area.
Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC were the joint bookrunners for the quick-to-market deal.
The Red Bank, N.J.-based homebuilder plans to use the proceeds to refinance its existing first-lien notes due 2016.
| Issuer: | K. Hovnanian Enterprises, Inc.
|
| Amount: | $797 million
|
| Securities: | Senior secured notes
|
| Bookrunners: | Credit Suisse Securities (USA) LLC, Citigroup Global Markets Inc., J.P. Morgan Securities LLC
|
| Change-of-control put: | 101%
|
| Trade date: | Sept. 19
|
| Settlement date: | Oct. 2
|
| Distribution: | Rule 144A for life
|
| Marketing: | Quick to market
|
|
|
| First-lien notes
|
| Amount: | $577 million, increased from $550 million
|
| Maturity: | Oct. 15, 2020
|
| Coupon: | 7¼%
|
| Price: | Par
|
| Yield: | 7¼%
|
| Spread: | 585 bps
|
| Call features: | Make-whole call at Treasuries plus 50 bps until Oct. 15, 2015 then callable at 105.438, 103.625, 101.813, par on and after Oct. 15, 2018
|
| Equity clawback: | 35% at 107.25 until Oct. 15, 2015
|
| Ratings: | Moody's: B3
|
| Standard & Poor's: CCC+
|
| Price talk: | 7¼% area
|
|
|
| Second-lien notes
|
| Amount: | $220 million, decreased from $247 million
|
| Maturity: | Nov. 15, 2020
|
| Coupon: | 9 1/8%
|
| Price: | Par
|
| Yield: | 9 1/8%
|
| Spread: | 773 bps
|
| Call features: | Make-whole call at Treasuries plus 50 bps until Nov. 15, 2015, then callable at 106.844, 104.563, 102.281, par on and after Nov. 15, 2018
|
| Equity clawback: | 35% at 109.125 until Nov. 15, 2015
|
| Ratings: | Moody's: Caa2
|
| Standard & Poor's: CCC-
|
| Price talk: | 9¼% area
|
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