HOV - Hovnanian Enterprises Announces Refinancing Transaction | Benzinga
MATAWAN, N.J., Sept. 25, 2023 (GLOBE NEWSWIRE) -- Hovnanian Enterprises, Inc. (NYSE:HOV) (the "Company"), a leading national homebuilder, announced today that it has entered into an agreement with existing investors to consummate a refinancing transaction that extends the maturities of over $600 million of the Company's secured debt to the fourth quarters of fiscal 2028 and fiscal 2029. Additionally, it has entered into an agreement with existing lenders to amend and extend its $125 million secured revolving credit facility to mature in June 2026.
"This refinancing significantly enhances our balance sheet and reduces risk," stated Ara K. Hovnanian, Chairman of the Board, President, and Chief Executive Officer. "We have taken significant steps to strengthen our balance sheet, including reducing our total debt by $668 million since the beginning of fiscal 2020. This refinancing transaction will extend maturities of all of our secured debt maturing in fiscal 2026 by a few years, with minimal impact to annual interest incurred. In addition, we will extend the maturity of our revolving credit facility by two years. As we move forward, we will continue to focus on both growing our land position to increase profitability and further repairing our balance sheet by growing equity and reducing debt."
Transaction Details:
- The Company will issue and sell in a private placement $225.0 million aggregate principal amount of new 8.0% Senior Secured 1.125 Lien Notes due 2028 and $430.0 million aggregate principal amount of new 11.75% Senior Secured 1.25 Lien Notes due 2029 (the "New Secured Notes").
- The Company has called for redemption all outstanding amounts of each series of its existing secured notes consisting of 7.75% Senior Secured 1.125 Lien Notes due 2026, 10.5% Senior Secured 1.25 Lien Notes due 2026, 11.25% Senior Secured 1.5 Lien Notes due 2026 and 10.0% Senior Secured 1.75 Lien Notes due 2025, in each case conditioned upon receipt of the proceeds from the sale of the New Secured Notes.
- The Company entered into a Third Amendment to the Credit Agreement governing its $125 million secured revolving credit facility which will, among other things, extend the final scheduled maturity thereof by two years to June 30, 2026, upon effectiveness at closing.
- The transactions are expected to close on October 5, 2023, upon the satisfaction of customary closing conditions.
Key Benefits include:
- Increased maturity runway: The transaction refinances all of the Company's secured debt maturing in fiscal 2026 and proactively extends these maturities until the fourth quarters of fiscal 2028 and fiscal 2029.
- Nominal increase in interest incurred: Given the recent rise in interest rates, we are pleased that the transaction will result in almost no increase in annual interest incurred.
- Extending the revolver maturity: ...