Hovnanian Debt Offer Rejected
Hovnanian, the big New Jersey-based homebuilder, got a big no thanks from its bond holders this week. The company had tried to reduce its massive $1.6 billion debt load by offering bondholders new securties paying 18% interest. The catch was they had to accept just 60 cents on the dollar for their outstanding notes. Just $71 million worth of bonds were tendered.
The move was an attempt to preserve some assets for stockholders, including the 18% of the shares owned by management and the Hovanian family, says the debt watchers at the research firm Gimmie Credit.
"It's going to be long and dangerous housing recession," Gimmie Credit concluded. "If Hovnanian fails, at least the normal pecking order of claims to its assets will remain in tact for now."
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