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MarketScreener Homepage  >  Equities  >  Nyse  >  Hovnanian Enterprises, Inc.    HOV

HOVNANIAN ENTERPRISES, INC.

(HOV)
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HOVNANIAN ENTERPRISES INC : Entry into a Material Definitive Agreement, Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant, Financial Statements and Exhibits (form 8-K)

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03/26/2020 | 03:24pm EDT

Item 1.01. Entry into a Material Definitive Agreement.

On March 25, 2020, Hovnanian Enterprises, Inc. (the "Company") and K. Hovnanian Enterprises, Inc. ("K. Hovnanian" or the "Issuer"), a wholly-owned subsidiary of the Company, completed a private exchange (the "Exchange") of $59,128,000 aggregate principal amount of the Issuer's 10.000% Senior Secured Notes due 2022 (the "10.000% Notes") held by certain participating bondholders (the "Exchanging Holders") for $59,128,000 aggregate principal amount of the Issuer's 11.25% Senior Secured 1.5 Lien Notes due 2026 (the "Additional Notes") pursuant to an Exchange Agreement, dated March 25, 2020 (the "Exchange Agreement"), among the Issuer, the Company, the subsidiary guarantors party thereto (together with the Company, the "Guarantors"), the Exchanging Holders and certain holders of the Initial Notes (as defined below) (the "Consenting Holders"). In connection therewith, the Consenting Holders provided their consents (the "Consents") under the Indenture (as defined below) to permit the issuance of the Additional Notes. After giving effect to the Exchange, there was approximately $136.7 million of 10.000% Notes outstanding.

The Additional Notes were issued as additional notes of the same series as the $103,141,000 aggregate principal amount of the Issuer's 11.25% Senior Secured 1.5 Lien Notes due 2026 issued on October 31, 2019 (the "Initial Notes" and, together with the Additional Notes, the "Notes"). In connection with the issuance of the Additional Notes in the Exchange, the Issuer, the Guarantors and Wilmington Trust, National Association, as trustee (the "Trustee") and collateral agent (the "Collateral Agent"), entered into the Fourth Supplemental Indenture, dated as of March 25, 2020 (the "Supplemental Indenture"), to the Indenture, dated as of October 31, 2019 (as amended and supplemented prior to the Supplemental Indenture, the "Indenture"), among the Issuer, the Guarantors, the Trustee and the Collateral Agent. The Supplemental Indenture also amends the Indenture in accordance with the Consents to permit the Issuer and Guarantors to secure up to $162,269,000 of 1.5 Lien Obligations (as defined in the Indenture). As of March 25, 2020, after giving effect to the issuance of the Additional Notes, $162,269,000 aggregate principal amount of 1.5 Lien Obligations, which consist of the Notes, were outstanding.

The Notes and the guarantees thereof will be secured by the same assets that secure K. Hovnanian's other senior secured credit facilities and senior secured notes. The Notes bear interest at 11.25% per annum, payable semi-annually on February 15 and August 15 of each year to holders of record at the close of business on February 1 or August 1, as the case may be, immediately preceding each such interest payment date. The date from which interest will accrue on the Additional Notes is February 15, 2020, and the first interest payment date for the Additional Notes will be August 15, 2020. The Notes mature on February 15, 2026.

The Indenture contains restrictive covenants that limit, among other things, and in each case, subject to certain exceptions, the ability of the Company and certain of its subsidiaries, including K. Hovnanian, to incur additional indebtedness, pay dividends and make distributions on common and preferred stock, repay certain indebtedness prior to its respective stated maturity, repurchase common and preferred stock, make other restricted payments (including investments), sell certain assets (including in certain land banking transactions), incur liens, consolidate, merge, sell or otherwise dispose of all or substantially all of their assets and enter into certain transactions with affiliates. The Indenture also contains customary events of default which would permit the holders of the Notes to declare the Notes to be immediately due and payable if not cured within applicable grace periods, including the failure to make timely payments on the Notes or other material indebtedness, the failure to satisfy covenants, the failure of the documents granting security for the Notes to be in full force and effect, the failure of the liens on any material portion of the collateral securing the Notes to be valid and perfected and specified events of bankruptcy and insolvency (which specified events would result in immediate acceleration of the Notes without any further action by the holders).

A copy of the Supplemental Indenture, including the form of the Additional Notes, is attached as Exhibit 4.1 to this Current Report on Form 8-K and is incorporated by reference herein.

Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an Off Balance Sheet Arrangement of a Registrant.

The information set forth above under Item 1.01 is hereby incorporated by reference into this Item 2.03.

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Item 9.01.   Financial Statements and Exhibits.



(d)   Exhibits.



4.1 Fourth Supplemental Indenture, dated as of March 25, 2020, relating to the

    additional 11.25% Senior Secured 1.5 Lien Notes due 2026, among K. Hovnanian
    Enterprises, Inc., Hovnanian Enterprises, Inc., the subsidiary guarantors
    named therein and Wilmington Trust, National Association, as Trustee and
    Collateral Agent, including the form of the additional 11.25% Senior Secured
    1.5 Lien Notes due 2026.




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© Edgar Online, source Glimpses

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