Private Theft of a Public Company?
Today, HOV announced that it is commencing with a Private Placement to raise $600 million dollars to be secured by substantially all of the assets of the company. The only assets that will have priority over this will be any debt to the revolver bankers. Do you think the bankers would let anyone get above them?
What is amazing about this offering, the Hovnanian Family could buy this private placement and basically own the entire company free and clear subject to only the bank's revolver interest and wipe out all shareholders and subordinated debt holders.
Effectively this is a stealth conversion of the shareholder's interest in a private placement offering that the current shareholders have no chance of participating. The participants in this private placement have first priority on substantially all of the assets of the company to the detriment of current shareholders and subordindated public debt holders.
It is absolutely amazing!!!!!!
What should be investigated is whether the Hovnanian Family is participating in this offering. If so they should be prosecuted and sent directly to jail for making misleading statements and/or behavior leading up to this offering.
In my career, I have never seen anything like this nor as potentially premeditated as the steps leading up to this private placement. This is not the theft of a few art pieces in a museam worth millions, this is theft of an entire publicly traded company worth hundreds of millions....now that is an accomplishment if gone unchecked.