Hovnanian extends early tender deadline of private exchange offers

By Angela McDaniels

Tacoma, Wash., Oct. 13 - Hovnanian Enterprises, Inc. extended the early tender and consent time of its private exchange offers to 5 p.m. ET on Oct. 17 from 5 p.m. ET on Oct. 12, according to a company news release.

The withdrawal deadline expired at 5 p.m. ET on Oct. 12 and was not extended.

In exchange for the existing notes, the company is offering up to $220 million of new 2% senior secured notes due 2021 to be issued in a private placement by subsidiary K. Hovnanian Enterprises, Inc. and guaranteed by Hovnanian. The new notes will be secured by assets that are not collateral for the company's existing secured debt.

Tenders will be accepted for any and all of the company's $137.6 million of outstanding 11 7/8% senior notes due 2015.

The following notes are subject to proration and are listed in order of acceptance priority level:

• $53.4 million of 6½% senior notes due 2014;

• $29.2 million of 6 3/8% senior notes due 2014;

• $52.7 million of 6¼% senior notes due 2015;

• $173.2 million of 6¼% senior notes due 2016;

• $172.3 million of 7½% senior notes due 2016; and

• $195.9 million of 8 5/8% senior notes due 2017.

If more than half of the outstanding 11 7/8% notes are tendered for exchange, the maximum amount of new notes to be issued will be $195 million. Otherwise, the maximum amount to be issued will be $220 million.

The company is also soliciting, for no consideration, from the holders of the 11 7/8% notes consents to proposed amendments to the indenture governing the notes that would eliminate substantially all of the restrictive covenants and some of the default provisions.

Holders who tender by the early tender and consent time will receive an amount of new notes equal to the amount of old notes exchanged.

Holders who tender after the early tender and consent time but prior to the offer deadline, 11:59 p.m. ET on Oct. 26, will receive an amount of new notes equal to 95% of the amount of old notes exchanged.

Accrued interest up to but excluding the settlement date will be paid in cash on all accepted notes.

The company said it will not accept any tender that would result in the issuance of less than $2,000 principal amount of the new notes.

The exchange offers and consent solicitation are not conditioned on a minimum principal amount of notes being tendered or the issuance of a minimum principal amount of the new notes. The consummation of the exchange offers is not conditioned on the consummation of the consent solicitation.

The company said the offer is being made as part of its efforts to reduce its borrowing costs and improve its balance sheet in light of challenging homebuilding market conditions. These efforts may also include the repurchase of additional bonds for which the company has about $175 million of capacity remaining under applicable debt covenants.

The exchange offers are being made within the United States only to qualified institutional buyers under Rule 144A of the Securities Act and outside the United States to non-U.S. investors under Regulation S of the Securities Act.

The information agent is Global Bondholder Services Corp. (866 389-1500 or 212 430-3774).

Hovnanian is a homebuilder based in Red Bank, N.J.

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