Hovnanian Enterprises’ Debt Financing Transactions

Simpson Thacher represented Hovnanian Enterprises, Inc. (“Hovnanian”), one of the nation’s largest homebuilders, in connection with its recent financing transactions with GSO Capital Partners LP (“GSO”).

As part of the financing transactions, K. Hovnanian Enterprises, Inc., its wholly owned subsidiary (“K. Hovnanian”), consummated the exchange (the “Exchange”) of approximately $170.2 million aggregate principal amount of its 8% Senior Notes due 2019 (the “8% 2019 Notes”) for approximately $90.6 million aggregate principal amount of K. Hovnanian’s newly issued 13.5% Senior Notes due 2026 and approximately $90.1 million aggregate principal amount of K. Hovnanian’s newly issued 5% Senior Notes due 2040, and K. Hovnanian at Sunrise Trail III, LLC, Hovnanian’s wholly owned subsidiary, purchased $26 million in aggregate principal amount of 8% 2019 Notes. In addition, Hovnanian, as guarantor, and K. Hovnanian, as borrower, entered into an unsecured term loan credit agreement and a senior secured revolving credit agreement with GSO and certain funds managed or advised by it that provide for (i) a senior unsecured term loan credit facility, consisting of $132.5 million of initial term loans (which were used to redeem all of K. Hovnanian’s 7% Senior Notes due 2019), and up to $80 million of delayed draw term loans available to refinance certain 8% 2019 Notes that remain outstanding following the Exchange and (ii) a senior secured first lien revolving credit facility of up to $125 million of senior secured first priority revolving loans which will be available to refinance certain existing secured indebtedness of K. Hovnanian and for general corporate purposes. Simpson Thacher also represented Hovnanian with respect to GSO’s commitment to purchase $25 million of additional 10.5% Senior Secured Notes due 2024 (the “10.5% 2024 Notes”) in January 2019.

In addition, Simpson Thacher represented K. Hovnanian in a successful solicitation of consents to adopt, with respect to its 10.5% 2024 Notes, an amendment to the indenture governing such notes.

The Simpson Thacher team included Marisa Stavenas (Picture), William Brentani, Richard Fenyes, Jean Park, Kim De Glossop, Ryan Coombs, Jo Djekovic, Ashley Yoon, Conor Colasurdo and Remy Denner (Capital Markets); Bill Sheehan, Nelli Zaltsman and Della Fok (Banking and Credit); Soogy Lee and Jonathan Pall (Collateral); Marcy Geller, Jonathan Cantor and Sarah Katz (Tax); Dennis Loiacono (Real Estate); Jamin Koslowe (Executive Compensation and Employee Benefits); Adeeb Fadil (Environmental) and Jennie Getsin (Blue Sky).

Involved fees earner: Marisa Stavenas – Simpson Thacher & Bartlett; William Brentani – Simpson Thacher & Bartlett; Richard Fenyes – Simpson Thacher & Bartlett; Jean Park – Simpson Thacher & Bartlett; Kim de Glossop – Simpson Thacher & Bartlett; Ryan Coombs – Simpson Thacher & Bartlett; Josephine Djekovic – Simpson Thacher & Bartlett; Ashley Sunha Yoon – Simpson Thacher & Bartlett; Conor Colasurdo – Simpson Thacher & Bartlett; Remy Denner – Simpson Thacher & Bartlett; William Sheehan – Simpson Thacher & Bartlett; Nelli Zaltsman – Simpson Thacher & Bartlett; Della Fok – Simpson Thacher & Bartlett; Hyang-Sook Lee – Simpson Thacher & Bartlett; Jonathan Pall – Simpson Thacher & Bartlett; Marcy Geller – Simpson Thacher & Bartlett; Jonathan Cantor – Simpson Thacher & Bartlett; Sarah Katz – Simpson Thacher & Bartlett; Dennis Loiacono – Simpson Thacher & Bartlett; Jamin Koslowe – Simpson Thacher & Bartlett; Adeeb Fadil – Simpson Thacher & Bartlett; Jennie Getsin – Simpson Thacher & Bartlett;

Law Firms: Simpson Thacher & Bartlett;

Clients: Hovnanian Enterprises, Inc.;

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Author: Ambrogio Visconti