Allegion Announces Pricing of $400 Million of Senior Notes
Allegion, a global security products and solutions provider, announced the pricing of $400 million of 5.600% senior unsecured notes due 2034 by its subsidiary, Allegion US Holding Company. The offering is expected to close on May 29, 2024, subject to customary closing conditions. The net proceeds will be used to repay $400 million of 3.200% senior notes maturing on October 1, 2024. BofA Securities, Citigroup Global Markets, and Wells Fargo Securities are among the joint book-running managers for the offering. The notes will be guaranteed by Allegion upon issuance.
- Allegion priced $400 million senior unsecured notes due 2034 at 5.600%.
- Net proceeds to repay $400 million of 3.200% senior notes maturing on October 1, 2024.
- Offering expected to close on May 29, 2024, subject to customary conditions.
- BofA Securities, Citigroup Global Markets, and Wells Fargo Securities are joint book-running managers.
- Senior notes have a higher interest rate at 5.600% compared to the maturing 3.200% notes, indicating increased borrowing costs.
Insights
Allegion's issuance of $400 million in senior unsecured notes at a 5.600% interest rate, due in 2034, stands as a notable financial maneuver. This move effectively replaces existing 3.200% notes maturing in October 2024. From a financial perspective, the issuance should be scrutinized for several reasons:
Firstly, the increase in the interest rate from 3.200% to 5.600% indicates a shift in borrowing costs. This elevation could be driven by broader market conditions or Allegion's specific risk profile. Despite the higher interest obligations, this step secures long-term financing, pushing significant debt maturities a decade into the future, thereby enhancing liquidity and financial stability in the near term.
Secondly, the involvement of major financial institutions like BofA Securities, Citigroup and Wells Fargo as joint book-running managers signifies solid institutional backing, potentially boosting investor confidence. This institutional involvement could also aid in broadening the investor base, lending more stability to Allegion's debt structure.
Lastly, for retail investors, understanding the implications of this debt replacement is crucial. A higher interest expense could impact profitability metrics in the short term, although the extension of debt maturity might be seen as a stabilization effort for long-term growth. This balance between immediate increased costs and long-term financial positioning needs to be carefully weighed when assessing the company's financial health.
The issuance of senior unsecured notes by Allegion reflects a strategic move within the broader context of the capital market environment. Given the current market conditions, where interest rates have been volatile, the 5.600% interest rate on the new notes isn't unexpected. This might suggest Allegion's proactive stance in securing financing prior to potential further rate hikes or other market fluctuations.
For investors, particularly retail ones, it's essential to see this not just as a debt restructuring but a move to mitigate future refinancing risks. The company's ability to attract significant underwriting support from top-tier financial institutions speaks volumes about its creditworthiness and market position. This strategic financing can be a signal of underlying confidence in Allegion's long-term prospects and operational stability despite the higher borrowing costs.
Moreover, it's important to observe that this move supports the liquidity stance of Allegion and may offer a buffer against market uncertainties, positioning the company to leverage growth opportunities or weather potential downturns more capably.
The notes will be guaranteed upon their issuance by Allegion.
The company expects to use the net proceeds from the offering to repay, at maturity, its
BofA Securities, Inc., Citigroup Global Markets Inc. and Wells Fargo Securities, LLC are acting as joint book-running managers for the offering. Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC and PNC Capital Markets LLC are also acting as joint book-running managers for the offering, and BNP Paribas Securities Corp., Huntington Securities, Inc., TD Securities (
Allegion has filed an effective registration statement with the
These securities are only offered by means of a prospectus and a prospectus supplement related to the offering. This press release is for informational purposes only and shall not constitute an offer to sell, or the solicitation of an offer to buy, any securities, nor will there be any sales of securities mentioned in this press release in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
About Allegion
Allegion (NYSE: ALLE) is a global pioneer in seamless access, with leading brands like CISA®, Interflex®, LCN®, Schlage®, SimonsVoss® and Von Duprin®. Focusing on security around the door and adjacent areas, Allegion secures people and assets with a range of solutions for homes, businesses, schools and institutions. Allegion had
Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934, including, but not limited to, the company’s statements regarding the company’s business plans and strategy, the timing and completion of the notes offering and the use of proceeds of the notes offering, as well as any other statement that does not directly relate to any historical fact. These forward-looking statements generally are identified by the words “believe,” “aim,” “project,” “expect,” “anticipate,” “estimate,” “forecast,” “outlook,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result” or the negative thereof or variations thereon or similar expressions generally intended to identify forward-looking statements. Forward-looking statements may relate to such matters as projections of revenue, margins, expenses, tax rate and provisions, earnings, cash flows, benefit obligations, dividends, share purchases or other financial items; any statements of the plans, strategies and objectives of management for future operations, including those relating to any statements concerning expected development, performance or market share relating to our products and services; any statements regarding future economic conditions or our performance; any statements regarding pending investigations, claims or disputes; any statements of expectation or belief; and any statements of assumptions underlying any of the foregoing. Undue reliance should not be placed on any forward-looking statements, as these statements are based on the company's currently available information and our current assumptions, expectations and projections about future events. They are subject to future events, risks and uncertainties - many of which are beyond the company’s control - as well as potentially inaccurate assumptions, that could cause actual results to differ materially from those in the forward-looking statements. Important factors and other risks that may affect the company's business or that could cause actual results to differ materially are included in filings the company makes with the Securities and Exchange Commission from time to time, including its Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q and in its other SEC filings. All forward-looking statements in this press release are expressly qualified by such cautionary statements and by reference to the underlying assumptions. The company undertakes no obligation to update these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240521974606/en/
Media Contact:
Whitney Moorman – Director, Global Communications
317-810-3241
Whitney.Moorman@allegion.com
Analyst Contacts:
Jobi Coyle – Director, Investor Relations
317-810-3107
Jobi.Coyle@allegion.com
Josh Pokrzywinski – Vice President, Investor Relations
463-210-8595
Joshua.Pokrzywinski@allegion.com
Source: Allegion plc
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