K. Hovnanian Enterprises, Inc. Commences Consent Solicitation to Amend Senior Notes Indenture

/ Source: GlobeNewswire

RED BANK, N.J., April 12, 2011 (GLOBE NEWSWIRE) -- Hovnanian Enterprises, Inc. (NYSE:HOV) (the "Company") announced today that its wholly owned subsidiary, K. Hovnanian Enterprises, Inc. ("K. Hovnanian"), has commenced a solicitation of consents (the "Consent Solicitation") to amend (the "Proposed Amendment") the indenture (the "Indenture") governing K. Hovnanian's 8 ⅝% Senior Notes due 2017 (the "Notes"). The Consent Solicitation is being made in accordance with the terms and subject to the conditions stated in a Consent Solicitation Statement dated April 12, 2011 (the "Consent Solicitation Statement") and in the related Consent Form (together, the "Solicitation Documents"), to holders of record ("Holders") as of 5:00 p.m., New York City time, on April 11, 2011.

The Consent Solicitation is scheduled to expire at 5:00 p.m., New York City time, on April 21, 2011, unless extended or earlier terminated (the "Expiration Date"). Holders of Notes who validly deliver consents to the Proposed Amendment in the manner described in the Consent Solicitation Statement will be eligible to receive consent consideration equal to $1.25 per $1,000 principal amount of Notes for which consents have been validly delivered prior to the Expiration Date (and not properly revoked). Holders providing consents after the Expiration Date will not receive consent consideration. Consent consideration will be paid to consenting Holders as promptly as practicable after the satisfaction or waiver of the conditions to the Consent Solicitation, including a financing condition (which is expected to be satisfied after the Expiration Date), as further described in the Consent Solicitation Statement.

The Consent Solicitation is subject to a number of conditions that are set forth in the Consent Solicitation Statement, including, without limitation, (i) the receipt of the consent of the Holders of at least a majority in aggregate principal amount of outstanding Notes (the "Requisite Consent"), (ii) the execution and effectiveness of a supplemental indenture effecting the Proposed Amendment and (iii) a financing condition, as further described in the Consent Solicitation Statement. Consents may not be revoked on or after the date the supplemental indenture is executed and becomes effective (which is expected to be promptly after receipt of the Requisite Consent and may occur prior to the Expiration Date if the Requisite Consent is received before then). If the supplemental indenture effecting the Proposed Amendment becomes operative, the Proposed Amendment will be binding upon all holders of Notes, whether or not such holders have delivered consents. A more comprehensive description of the Consent Solicitation can be found in the Solicitation Documents.

The purpose of the Consent Solicitation is to obtain approval of the Proposed Amendment from the holders of the Notes to modify the Indenture to permit K. Hovnanian to issue additional first lien secured notes in an amount necessary to refinance through redemption all of its outstanding 11½% Senior Secured Notes due 2013 (the "Second Lien Notes") and 18.0% Senior Secured Notes due 2017 (the "Third Lien Notes" and, together with the Second Lien Notes, the "Junior Lien Notes"). As of January 31, 2011, there were approximately $0.5 million aggregate principal amount of Second Lien Notes outstanding and approximately $11.7 million aggregate principal amount of Third Lien Notes outstanding. 

Credit Suisse Securities (USA) LLC is the Solicitation Agent in connection with the Consent Solicitation. Persons with questions regarding the Consent Solicitation should contact Credit Suisse Securities (USA) LLC at (212) 538-2147 (collect) or (800) 820-1653 (toll-free) (Attention: Liability Management Group). Requests for copies of the Solicitation Documents and other related materials should be directed to Bondholder Communications Group, the Information and Tabulation Agent for the Consent Solicitation, at (888) 385-2663 (toll-free) or alternatively, the documents may be downloaded at www.bondcom.com/khov.

K. Hovnanian's obligations to pay the consent consideration are set forth solely in the Solicitation Documents. This press release is neither an offer to purchase nor a solicitation of an offer to sell any Notes, first lien secured notes or Junior Lien Notes nor shall there be any sale of first lien secured notes in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. Any offer of first lien secured notes will be made only by means of a separate prospectus, offering circular or offering memorandum which would be made available at the time of such offering. The Consent Solicitation is being made only by, and pursuant to the terms of, the Solicitation Documents, and the information in this news release is qualified by reference to the Solicitation Documents. No recommendation is made, or has been authorized to be made, as to whether or not holders of Notes should consent to the adoption of the Proposed Amendment pursuant to the Consent Solicitation. Each holder of Notes must make its own decision as to whether to give its consent to the Proposed Amendment. The Consent Solicitation is not being made in any jurisdiction in which the making thereof would not be in compliance with the applicable laws of such jurisdiction. In any jurisdiction in which the Consent Solicitation is required to be made by a licensed broker or dealer, they shall be deemed to be made by the Solicitation Agent on behalf of K. Hovnanian. None of the Company, K. Hovnanian, the Solicitation Agent or the Information and Tabulation Agent makes any recommendation in connection with the Consent Solicitation. Subject to applicable law, K. Hovnanian may amend, extend or terminate the Consent Solicitation.

About Hovnanian Enterprises

Hovnanian Enterprises, Inc., founded in 1959 by Kevork S. Hovnanian, is headquartered in Red Bank, New Jersey. The Company is one of the nation's largest homebuilders with operations in Arizona, California, Delaware, Florida, Georgia, Illinois, Kentucky, Maryland, Minnesota, New Jersey, New York, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Virginia and West Virginia. The Company's homes are marketed and sold under the trade names K. Hovnanian® Homes®, Matzel & Mumford, Brighton Homes, Parkwood Builders, Town & Country Homes and Oster Homes. As the developer of K. Hovnanian's® Four Seasons communities, the Company is also one of the nation's largest builders of active adult homes.

The Hovnanian Enterprises, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7499

Forward-Looking Statements

All statements in this Press Release that are not historical facts should be considered as "forward-looking statements" within the meaning of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such risks, uncertainties and other factors include, but are not limited to, (1) changes in general and local economic and industry and business conditions and impacts of the sustained homebuilding downturn, (2) adverse weather conditions and natural disasters, (3) changes in market conditions and other environmental conditions and seasonality of the Company's business, (4) changes in home prices and sales activity in the markets where the Company builds homes, (5) government regulation, including regulations concerning development of land, the home building, sales and customer financing processes, tax laws, and the environment, (6) fluctuations in interest rates and the availability of mortgage financing, (7) shortages in, and price fluctuations of, raw materials and labor, (8) the availability and cost of suitable land and improved lots, (9) levels of competition, (10) availability of financing to the Company, including in order to satisfy the financing condition for the Consent Solicitation (11) utility shortages and outages or rate fluctuations, (12) levels of indebtedness and restrictions on the Company's operations and activities imposed by the agreements governing the Company's outstanding indebtedness, (13) operations through joint ventures with third parties, (14) product liability litigation and warranty claims, (15) successful identification and integration of acquisitions, (16) significant influence of the Company's controlling stockholders, (17) geopolitical risks, terrorist acts and other acts of war, (18) the Company's sources of liquidity, (19) changes in credit ratings, (20) availability of net operating loss carryforwards and (21) other factors described in detail in the Company's Amendment No. 1 to the Annual Report on Form 10-K/A for the year ended October 31, 2010, the Company's quarterly report or Form 10-Q for the quarter ended January 31, 2011 and in the Consent Solicitation Statement.

CONTACT: J. Larry Sorsby Executive Vice President & CFO 732-747-7800 Jeffrey T. O'Keefe Vice President of Investor Relations 732-747-7800