The company will use proceeds from the sale to buy some of its senior unsecured notes in a private transaction, the Red Bank, New Jersey-based company said today in a statement. Hovnanian also said it may use money from the offering for general corporate purposes, including debt payment or refinancing. The shares fell after the close of regular trading in New York.
Hovnanian reported a narrower first-quarter loss on March 7 as sales rose and the company reduced writedowns. As the housing market recovers and the company returns to profitability, “we should be able to issue equity at higher prices than today,” Larry Sorsby, Hovnanian’s chief financial officer, said in a March 7 earnings conference call. The shares closed at $2.46 that day and have fallen 4.5 percent since then.
“It won’t make a dent in their debt load,” Vicki Bryan, a bond analyst at New York-based Gimme Credit LLC. “This could be a red flag.”
The planned stock sale was announced after the end of regular U.S. trading. The shares fell 2.9 percent to $2.35 as of 4:15 p.m. in New York. They traded as low as $2.03 after the close.
To contact the reporter on this story: Brian Louis in Chicago at blouis1@bloomberg.net
To contact the editor responsible for this story: Daniel Taub at dtaub@bloomberg.net
| TIME | |||||
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