Hovnanian amends loan, reducing size to $300 million

By Sara Rosenberg

New York, May 22 - Hovnanian Enterprises Inc. amended its credit facility, decreasing the size to $300 million from $900 million, according to an 8-K filed with the Securities and Exchange Commission Thursday.

Borrowings under the revolver are priced at Libor plus 450 basis points and there is a 55 bps unused fee.

Until July 31, the full amount under the facility will be available for the issuance of letters of credit and up to $25 million will be available for revolving loans. After July 31, availability will equal the lesser of $300 million and the amount available pursuant to the borrowing base, and the sub-limit for revolving loans will be increased to $100 million.

Financial covenants under the amended facility include a minimum operating cash flow coverage ratio or minimum liquidity as of the last day of each fiscal quarter.

The amendment was completed on May 16, but won't become effective until the completion of the sale of $600 million of 11½% senior secured notes due 2013. The settlement date for the notes is May 27.

Hovnanian is a Red Bank, N.J.-based homebuilder.

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