The company’s moves toward a debt restructuring were underway last week when company founder and chairman Kevork Hovnanian died Friday at age 86. The impact of the Rumson resident’s passing on his family’s control of the publicly traded company is unclear, the Journal reports.
The newspaper reports that Hovnanian plans to buy back the debt, “the bulk of” which is due for repayment by 2013, and replace it with obligations payable over the next eight to ten years.
The aim, the article suggests, is to enable Hov, which is the nation’s sixth-largest homebuilder, to get back into the business of land acquisition as banks offload foreclosed tracts. Other major builders are already buying, the Journal says.
Hovnanian, though, has racked up three consecutive years of red ink totaling $2.3 billion, during which it has been selling properties and marking down the values of those it retains. In the last reported quarter, though, the company bought $37 million worth of real estate, according to the report.
From the Journal:
“The company is caught in a tough spot,” said David Goldberg, an analyst at UBS Investment Bank in New York.
Asked to comment on the company’s financial strains, a Hovnanian spokesman said that “we have been in business for 50 years and successfully navigated through numerous housing cycles.”