Hovnanian Enterprises, Inc. (NYSE:HOV) (“Hovnanian” or the “Company”) announced today that it has closed its previously announced financing transactions with GSO Capital Partners LP (“GSO”), Blackstone’s credit platform (NYSE:BX), and certain funds managed or advised by it.
As part of such financing transactions, the company’s wholly-owned subsidiary, K. Hovnanian Enterprises, Inc. accepted all of the $170,226,000 aggregate principal amount of the 8.000% Senior Notes due 2019 tendered in its previously announced exchange offer. On February 1, K. Hovnanian issued $90,590,000 aggregate principal amount of its 13.5% Senior Notes due 2026 and $90,120,000 aggregate principal amount of its 5.0% Senior Notes due 2040. In addition, K. Hovnanian at Sunrise Trail III, LLC, a wholly-owned subsidiary of Hovnanian, purchased for $26,519,999.96 in cash, as part of the Exchange Offer, $26,000,000 aggregate principal amount of the 8% 2019 Notes.
In addition, as previously announced, K. Hovnanian and the company entered into credit agreements, dated January 29, 2018, with GSO and certain funds managed or advised by it that provide for a senior unsecured term loan credit facility, consisting of $132.5 million of initial term loans, up to $80.0 million of delayed draw term loans available to refinance 8% 2019 Notes that remain outstanding following the consummation of the Exchange Offer and a senior secured first lien revolving credit facility of up to $125.0 million of senior secured first priority revolving loans to refinance its current $75 million first priority secured term loan and for general corporate purposes. On February 1, 2018, K. Hovnanian closed on the borrowing of $132.5 million of initial term loans, the proceeds of which were used to redeem, on February 1, 2018, all of K. Hovnanian’s outstanding $132,546,000 aggregate principal amount of 7.000% Senior Notes due 2019.
“We are pleased to have successfully closed this transaction and with significant participation in the exchange offer,” stated Ara K. Hovnanian, chairman, president and CEO. “This refinancing will provide us with much-needed financial flexibility and additional liquidity to help continue growing our business. Not only do the refinancing agreements push out our 2019 maturities at favorable rates, but GSO has also provided us with a $125 million credit facility to refinance our $75 million term loan in September of 2018 and for general corporate purposes and a commitment to purchase $25 million of additional 10.5% senior secured notes to be issued in January 2019. Our plan continues to be to use cash to pay off our unsecured revolving credit facility at its maturity dates in 2018. Since our next significant maturity is not until the end of 2021, we will be focusing with increased concentration on reloading our land position, executing to our business plan and further improving our operating results.”
