Hovnanian Enterprises, Inc., Matawan, N.J. (NYSE:HOV) announced Thursday 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 maturing in 2022.

“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, CEO 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.
Among the moves the company made:
- 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.
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. The transactions also 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. 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 Hovnanian.