EnerSys Announces Closing of $300 Million Aggregate Principal Amount of Senior Notes

Rhea-AI Summary

EnerSys (NYSE: ENS) announced the closing of $300 million in 6.625% senior notes due 2032. The unsecured, unsubordinated obligations are guaranteed by the Company's subsidiaries. The net proceeds will be used to repay outstanding term loans and for general corporate purposes. The Notes and guarantees have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States without registration or an applicable exemption.

Insights

Financial Analyst

The issuance of $300 million in senior notes by EnerSys represents a strategic move to restructure the company's debt profile. By opting for a fixed interest rate of 6.625%, EnerSys is potentially capitalizing on current market conditions to lock in interest rates, which might be favorable compared to future expectations. The decision to use these funds primarily to repay existing term loans suggests a proactive approach to debt management, potentially reducing interest expenses in the long run.

Investors should note the unsecured and unsubordinated nature of these notes, which indicates that they rank equally with other unsecured and unsubordinated debt of the company. This implies a moderate level of risk, as repayment is not prioritized over other similar debts but is still senior to equity in the event of liquidation. The guarantee by the company's subsidiaries that also back other senior credit facilities provides an additional layer of security for note holders.

Market Research Analyst

From a market perspective, EnerSys's actions reflect broader trends among corporations seeking to optimize their balance sheets in a time of economic uncertainty. The use of proceeds to pay down revolving credit facilities without reducing commitments maintains the company's liquidity flexibility, which is a prudent measure in case of unforeseen market shifts or business needs.

It's also important to consider the method of offering, which was limited to qualified institutional buyers and non-U.S. persons. This targeted approach is indicative of a strategy to engage investors who are typically more sophisticated and capable of large-scale investments, which might contribute to a quicker and more efficient capital-raising process.

Legal Expert

The legal framework surrounding the offering of the Notes is significant. The reliance on Rule 144A and Regulation S allows EnerSys to bypass the public registration requirements of the Securities Act of 1933, expediting the offering process and reducing the regulatory burden. However, this also limits the potential investor base and liquidity of the Notes, as they cannot be freely traded among the general public in the United States.

Investors should be aware of the implications of the securities not being registered under the Securities Act, which includes a limitation on the resale of the Notes, potentially impacting their marketability and pricing. The company's clear statement that this press release does not constitute an offer to sell, or the solicitation of an offer to buy, is a standard disclaimer to comply with securities law and prevent the unintentional offering of unregistered securities.

READING, Pa.--(BUSINESS WIRE)-- EnerSys (NYSE: ENS) (“EnerSys” or the “Company”) announced today the closing of $300 million aggregate principal amount of its 6.625% senior notes due 2032 (the “Notes”). The Notes were issued at an issue price of 100% of the principal amount. The Notes are unsecured, unsubordinated obligations of the Company and are guaranteed by each of the Company’s subsidiaries that guarantee the Company’s senior secured credit facilities and 4.375% senior notes due 2027.

The Company intends to use the net proceeds from the offering to repay and retire a portion of its outstanding term loans. The Company intends to use the remaining net proceeds for general corporate purposes, including to repay a portion of the outstanding borrowings under its revolving credit facility (without a reduction in commitment). The exact allocation of such proceeds and the timing thereof is at the discretion of the Company's management.

The Notes and the related guarantees have not been and will not be registered under the Securities Act of 1933, as amended (the “Securities Act”), or any applicable state or foreign securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from registration under the Securities Act and applicable state securities laws. The Notes were offered only to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act and outside the United States to non-U.S. persons pursuant to Regulation S under the Securities Act.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities 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 EnerSys

EnerSys is the global leader in stored energy solutions for industrial applications and designs, manufactures, and distributes energy systems solutions and motive power batteries, specialty batteries, battery chargers, power equipment, battery accessories and outdoor equipment enclosure solutions to customers worldwide. The company goes to market through four lines of business: Energy Systems, Motive Power, Specialty and New Ventures. Energy Systems, which combine power conversion, power distribution, energy storage, and enclosures, are used in the telecommunication, broadband and utility industries, uninterruptible power supplies, and numerous applications requiring stored energy solutions. Motive power batteries and chargers are utilized in electric forklift trucks and other industrial electric powered vehicles. Specialty batteries are used in aerospace and defense applications, large over-the-road trucks, premium automotive, medical and security systems applications. New Ventures provides energy storage and management systems for various applications including demand charge reduction, utility back-up power, and dynamic fast charging for electric vehicles. EnerSys also provides aftermarket and customer support services to its customers in over 100 countries through its sales and manufacturing locations around the world.

Caution Concerning Forward-Looking Statements

This press release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements that are not historical facts, including statements identified by words such as “believe,” “plan,” “seek,” “expect,” “intend,” “estimate,” “anticipate,” “will,” and similar expressions. All statements addressing operating performance, events or developments that EnerSys expects or anticipates will occur in the future, including statements relating to the use of proceeds from the offering of the Notes, are forward-looking statements. The forward-looking statements are based on management’s current views and assumptions regarding future events and operating performance, and are inherently subject to risks and uncertainties. The statements in this press release are made as of the date of this press release. EnerSys does not undertake any obligation to update or revise these statements to reflect events or circumstances occurring after the date of this press release.

The foregoing factors, among others, could cause actual results to differ materially from those described in these forward-looking statements. For a list of other factors which could affect EnerSys’ results, including earnings estimates, see EnerSys’ filings with the Securities and Exchange Commission, including “Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations,” and “Forward-Looking Statements,” set forth in EnerSys’ Annual Report on Form 10-K for the fiscal year ended March 31, 2023. No undue reliance should be placed on any forward-looking statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240111079393/en/

Lisa Hartman

Vice President, Investor Relations and Corporate Communications

EnerSys

610-236-4040

E-mail: investorrelations@enersys.com

Source: EnerSys

FAQ

What did EnerSys announce?

EnerSys announced the closing of $300 million in 6.625% senior notes due 2032.

What is the ticker symbol for EnerSys?

The ticker symbol for EnerSys is ENS.

What will the net proceeds be used for?

The net proceeds will be used to repay outstanding term loans and for general corporate purposes.

Are the Notes and guarantees registered under the Securities Act of 1933?

No, the Notes and guarantees have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States without registration or an applicable exemption.