Hovnanian Enterprises Completes Refinancing Transactions

October 31, 2019

Source: Globe Newswire

Hovnanian Enterprises, Inc. (NYSE:HOV) (“Hovnanian” or the “Company”) announced today that it has closed several refinancing transactions that extend the maturities of over $700 million of the Company’s debt, including addressing all near-term maturities through 2021, as well as proactively extending approximately 50% of its upcoming maturities in 2022 and 2024. Additionally, the Company refinanced its $125 million secured revolving credit facility, which had revolving commitments terminating in December 2019, to a new secured revolving credit facility (the “New Revolver”) maturing in 2022.

The transactions provide Hovnanian with meaningful maturity extensions and increased financial flexibility to grow its asset base and continue positive momentum in executing on its multi-year strategy to achieve its key metric targets. Additionally, the transactions simplify the Company’s capital structure and enable it to maintain its strong liquidity position.

“These transactions provide us with a stronger capital structure to continue executing on our growth strategy, and increase value for all stakeholders,” said Ara Hovnanian, President, Chief Executive Officer and Chairman of Hovnanian. “We have successfully executed on the first several pillars of our strategy, having improved lots under control, increased community count, and demonstrated strong trends in contract growth per community. With today’s announcement, we are in great position to deliver more homes, increase our top line, leverage our overhead and interest expenses, and enhance our profitability,” added Mr. Hovnanian.

Transaction Details

The Company exchanged or refinanced $221.0 million of 10% Senior Secured Notes due 2022 and $213.6 million of its 10.5% Senior Secured Notes due 2024 into $350.0 million of new 7.75% Senior Secured Notes due 2026 and/or cash and $103.1 million of new 11.25% Senior Secured Notes due 2026.

Additionally, the Company has entered into the 7.75% New Revolver to replace its prior 10.0% secured revolver, which had revolving commitments terminating in December 2019.

The Company refinanced its near-term maturities consisting of its 9.5% Senior Secured Notes due 2020, 2.0% Senior Secured Notes due 2021, and 5.0% Senior Secured Notes due 2021, with the net proceeds of $282.3 million aggregate principal amount of 10.5% Senior Secured Notes due 2026.

Key benefits include:

Increased Maturity Runway: The transactions refinance all of the Company’s $270.0 million of debt maturing through 2021 with new debt due 2026 and proactively extend approximately 50% of its debt maturing in 2022 and 2024 to 2026.

Simplified Collateral Pool/Pledge of Additional Collateral to Existing Creditors: The transactions combine the Company’s two secured debt collateral pools to create a broader collateral base for its secured debt holders, which has enabled the Company to align the collateral and guarantee structure for all of its lenders. This alignment will simplify the Company’s corporate structure and reduce future recurring administrative costs.

Maintains Strong Liquidity Position: The transactions address near-term maturities while maintaining balance sheet cash and full revolver availability, thereby preserving these resources to deploy into new investments.

“Hovnanian has been working on balance sheet improvements since the great housing recession in 2009, consistently taking steps to enhance our financial flexibility. From the beginning of 2009, we have reduced debt by almost $1.1 billion and are back to achieving substantial growth. Moving forward, Hovnanian continues to actively analyze its capital structure and explore additional transactions to strengthen its balance sheet, including those that reduce leverage or extend maturities,” added Mr. Hovnanian.

ABOUT HOVNANIAN ENTERPRISES, INC.

Hovnanian Enterprises, Inc., founded in 1959 by Kevork S. Hovnanian, is headquartered in Matawan, New Jersey and, through its subsidiaries, is one of the nation’s largest homebuilders with operations in Arizona, California, Delaware, Florida, Georgia, Illinois, Maryland, New Jersey, Ohio, Pennsylvania, South Carolina, Texas, Virginia, Washington, D.C. and West Virginia. The Company’s homes are marketed and sold under the trade name K. Hovnanian® Homes. Additionally, the Company’s subsidiaries, as developers of K. Hovnanian’s® Four Seasons communities, make the Company one of the nation’s largest builders of active lifestyle communities.

Additional information on Hovnanian Enterprises, Inc. can be accessed through the “Investor Relations” section of the Hovnanian Enterprises’ website at http://www.khov.com. To be added to Hovnanian's investor e-mail list, please send an e-mail to IR@khov.com or sign up at http://www.khov.com.