K. Hovnanian wraps tender offer, to buy $1.01 billion of notes

New York, Oct. 20 - K. Hovnanian Enterprises, Inc. said it completed its tender offer for multiple series of notes and will buy a total of $1.01 billion of its debt.

The tender ended at midnight ET on Oct. 19.

K. Hovnanian said holders tendered and it accepted for purchase:

• $599,522,000, or 99.9%, of its $600 million of 11½% senior secured notes due 2013;

• $29,299,000, or 60.1% of its $29,299,000 18% senior secured notes due 2017;

• $7,946,000, or 18.3%, of its $43.5 million 8% senior notes due 2012;

• $57,101,000, or 39.7%, of its $144 million 6½% senior notes due 2014;

• $23,554,000, or 20.6%, of its $114.3 million 6 3/8% senior notes due 2014; and

• $36,632,000, or 28.3%, of its $129.3 million 6¼% senior notes due 2015.

The tender for the unsecured notes was oversubscribed, so the company accepted for purchase:

• $198,000 of the $64,668,000, or 37.5%, tendered of its $172.5 million of 7½% senior notes due 2016. The pro ration factor was 0.33%;

• None of the $73,588,000, or 42.5%, tendered of its $173.2 million 6¼% senior notes due 2016.

At its previous announcement on Oct. 5, K. Hovnanian decreased the maximum payment to be made to purchase unsecured notes in its tender offer to $100 million from $130 million, according to a company news release.

The company also announced that it has received enough consents from the holders of its secured notes to amend the indentures.

Tender offers for eight series of notes began on Sept. 21.

In the first offer, the company said it would purchase any and all of its $600 million of 11½% senior secured notes due 2013 for $1,060 each.

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

The company was 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.

The company was also seeking consents from holders of the 18% notes to amend the definition of "refinancing indebtedness."

Finally, holders of the 11½% notes were asked to consent to an increase in the maximum amount of debtor-in-possession financing that the trustee, collateral agent and mortgage tax collateral agent under the company's intercreditor agreement shall be deemed to have consented to on behalf of themselves and the noteholders to the amount that is consented to from time to time by the holders of the first-lien debt being permitted under that consent.

For each series of notes, consents were 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 was purchasing as many of the following notes as it can for $100 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 due 2015 and $770 for the 7½% notes and 6¼% notes due 2016.

No consents were being solicited from these holders.

Since the amount of notes tendered would have caused the company to spend more than $100 million, notes were accepted up to the cap in the order of their acceptance priority levels.

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.

As of the early tender date, holders had tendered:

• $589,227,000, or 98.2%, of the 11½% notes;

• $17,597,000, or 60.1%, of the 18% notes;

• $7,826,000, or 18%, of the 8% notes;

• $60,206,000, or 41.8%, of the 6½% notes;

• $26,054,000, or 22.8%, of the 6 3/8% notes;

• $36,632,000, or 28.3%, of the 6¼% notes due 2015;

• $64,523,000, or 37.4%, of the 7½% notes; and

• $75,129,000, or 43.4%, of the 6¼% notes due 2016.

Each offer was 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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