K. Hovnanian amends consent solicitation for 11½% senior secured notes

By Jennifer Chiou

New York, Oct. 1 - K. Hovnanian Enterprises, Inc. announced an update to the consent solicitation for its 11½% senior secured notes due 2013.

In addition to the prior terms that are detailed below, the company is seeking consents from 11½% noteholders to increase the maximum amount of allowed debtor-in-possession financing to the amount that is consented to from time to time by the holders of the first-lien debt permitted in the solicitation.

K. Hovnanian began tender offers for eight series of outstanding notes on Sept. 21.

In the first offer, the company will purchase any and all of its $600 million of 11½% senior secured notes for $1,060 each.

In the second offer, K. Hovnanian will buy any and all of its $29,299,000 18% senior secured notes due 2017 at par.

As already reported, the company is soliciting consents from the holders of the 11½% notes and 18% notes to amend the indentures to allow the incurrence of additional first-lien secured debt and to eliminate the limitation on repurchases of certain debt. Holders of the 18% notes are also being asked to consent to the amendment of the definition of "refinancing indebtedness."

For each series of notes, consents are needed from the holders of a majority of those notes by the early tender date, 5 p.m. ET on Oct. 2, in order to adopt the proposed amendments.

In the third offer, the company will purchase as many of the following notes as it can for $130 million:

• $43.5 million 8% senior notes due 2012;

• $144 million 6½% senior notes due 2014;

• $114.3 million 6 3/8% senior notes due 2014;

• $129.3 million 6¼% senior notes due 2015;

• $172.5 million 7½% senior notes due 2016; and

• $173.2 million 6¼% senior notes due 2016.

The notes are listed in order of acceptance priority level.

For each $1,000 principal amount, the purchase price is $880 for the 8% notes, $800 for the 6½% notes, $790 for the 6 3/8% notes, $780 for the 6¼% notes and $770 for the 7½% and 6¼% notes.

No consents are being solicited from these holders.

If the amount of note tendered would cause the company to spend more than $130 million, notes will be accepted up to the cap in the order of their acceptance priority levels. Notes may be subject to proration.

In each of the three offers, the purchase price listed includes a $50 early tender consideration for each note tendered by the early tender date. Holders will also receive accrued interest up to but excluding the settlement date.

The offers will expire at midnight ET on Oct. 19.

Each offer is conditioned on the receipt of tenders and consents for at least a majority of the 11½% notes and 18% notes by the early tender date, the execution of supplemental indentures to the indentures relating to the 11½% notes and 18% notes and the receipt of enough funds from financings to pay the total purchase price for the offers plus accrued interest.

Credit Suisse Securities (USA) LLC (800 820-1653 or 212 538-1862) is the dealer manager and solicitation agent. Bondholder Communications Group (888 385-2663) is the information and tender agent.

K. Hovnanian is a subsidiary of Red Bank, N.J.-based homebuilder Hovnanian Enterprises, Inc.

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