GSO Beats Rival Funds to Hovnanian Deal in Credit Swaps Showdown
- Blackstone distressed-debt unit poised to profit on CDS bet
- Infusion helps struggling homebuilder push out maturities
Homes under construction stand in the Hovnanian Enterprises Inc.'s Four Seasons housing development in Beaumont, Calif. on March 4, 2013.
Photographer: Patrick T. Fallon/Bloomberg
In a flurry of pre-New Year disclosures, homebuilder Hovnanian Enterprises Inc. said it’s taking a financing package offered by Blackstone Group’s GSO Capital Partners over the objections of a rival hedge-fund group.
The move could lead to payouts on credit-default swaps held by GSO, while helping Hovnanian win favorable terms to clean up its balance sheet. The terms allow Hovnanian to pay down debt coming due in the next couple of years and replace it with borrowings that won’t start maturing until well into the next decade, according to a statement. Its stock jumped 8.1 percent on Friday and has nearly doubled from the year’s lows in September.