Equitable Holdings Announces Cash Tender Offer for Up to $500 Million Aggregate Purchase Price of Its Debt Securities
Equitable Holdings (NYSE: EQH) has announced a cash tender offer to purchase up to $500 million of its outstanding debt securities. The offer prioritizes the 4.572% Senior Notes due 2029, the 7.000% Senior Debentures due 2028, and the 5.000% Senior Notes due 2048. The tender offer is subject to a Financing Condition, requiring proceeds from new issuance and sale of eligible assets. Key dates include an early tender deadline on June 14, 2024, and expiration on July 2, 2024. Payments for early and late tenders will be made on June 20, 2024, and July 5, 2024, respectively.
- Purchase of up to $500 million debt reduces outstanding liabilities.
- Early tender premium of $30 per $1,000 incentivizes early participation.
- New issuance of trust securities enhances liquidity.
- Order of priority ensures strategic debt reduction.
- Potential for lower ongoing costs due to higher rate environment.
- Tender offer is subject to Financing Condition, adding uncertainty.
- Debt purchase may not cover all series due to Series Cap limits.
- Potential proration may limit the number of notes redeemed.
- Uncertainty about future purchases or redemptions affecting note prices.
Insights
Equitable Holdings' cash tender offer to purchase up to
From an investor's perspective, this maneuver signals financial stability and a proactive approach to debt management. Investors should note that while this may temporarily increase liquidity, it involves certain risks, including the company's dependency on the successful completion of other financial transactions, such as the new issuance of pre-capitalized trust securities.
Moreover, the tender offer's prioritization and series cap ensure that the company maximizes the impact of its cash outlay. This is important in an environment where interest rates are fluctuating. The structured approach indicates strategic foresight, aiming to optimize financial outcomes and maintain liquidity without compromising future financial flexibility.
In the short-term, investors can expect a potential positive impact on stock performance due to improved financial metrics. However, they should also consider the long-term implications of these transactions on the company's overall leverage and capital structure.
Overall, this move reflects prudent financial management but requires careful monitoring of subsequent financial obligations and liquidity events.
The announcement by Equitable Holdings to engage in a cash tender offer for its debt securities is indicative of their strategic market positioning. This tender offer, focusing on specific debt securities, allows Equitable Holdings to manage its debt at a time when market conditions might be more favorable than those at the initial issuance.
By setting the Maximum Aggregate Purchase Price at
The impact on the market can be multifaceted. In the immediate term, holders of the debt securities might see an opportunity for liquidity, especially those who opt for the early tender premium. For the broader market, this move could be interpreted as a signal that Equitable Holdings is well-prepared to handle its financial obligations, potentially leading to a positive sentiment around the company's stock.
However, investors must also keep in mind the potential downside risks. The success of the tender offer and the subsequent debt management strategies depend on market conditions and execution of the parallel financial transactions mentioned in the release. Any hiccup in these processes could lead to increased financial strain.
In summary, while this tender offer is a calculated move to manage debt and liquidity, investors should remain vigilant about the ongoing execution risks and market conditions.
Title of
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CUSIP /
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Aggregate
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Series Cap (1) |
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Acceptance
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Reference |
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Bloomberg
Page (3) |
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Fixed Spread
(4) |
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|||
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054561AN5/ US054561AN50
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|
$ |
600,000,000 |
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|
$ |
275,000,000 |
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|
1 |
|
|
|
|
FIT1 |
|
|
75 |
|
|
|
29444GAJ6/ US29444GAJ67 |
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$ |
350,000,000 |
|
|
$ |
100,000,000 |
|
|
2 |
|
|
|
|
FIT1 |
|
|
70 |
|
|
|
054561AM7/ US054561AM77
U0507EAD6 / USU0507EAD68 (Reg S)
054561AK1/ US054561AK12 (Rule 144A
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|
$ |
1,500,000,000 |
|
|
$ |
125,000,000 |
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|
3 |
|
|
|
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FIT1 |
|
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110 |
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(1) |
The Series Cap represents the maximum aggregate principal amount of such series of Notes that will be purchased. The Company reserves the right, but is under no obligation, to increase, decrease or eliminate the Series Cap at any time, including on or after the Price Determination Date, subject to applicable law. |
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(2) |
Subject to the Maximum Aggregate Purchase Price, the Series Cap and proration, the principal amount of each series of Notes that is purchased in the Tender Offer will be determined in accordance with the applicable Acceptance Priority Level (in numerical priority order with 1 being the highest Acceptance Priority Level and 3 being the lowest) specified in this column. |
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(3) |
The Bloomberg Reference Page is provided for convenience only. To the extent any Bloomberg Reference Page changes prior to the Price Determination Date (as defined below), the Lead Dealer Manager referred to below will quote the applicable Reference Treasury Security from the updated Bloomberg Reference Page. |
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(4) |
Includes the Early Tender Premium of |
The terms and conditions of the Tender Offer are described in an Offer to Purchase dated June 3, 2024 (as it may be amended or supplemented, the “Offer to Purchase”). The Tender Offer is subject to the satisfaction of certain conditions as set forth in the Offer to Purchase, including (i) the settlement of the new issuance of Pre-Capitalized Trust Securities by Pine Street Trust III, a
Subject to applicable law, the Company may waive any and all of these conditions or extend, terminate or withdraw the Tender Offer with respect to one or more Series of Notes including increase or decrease the Maximum Aggregate Purchase Price and/or increase, decrease or eliminate the Series Cap at any time, including on or after the Price Determination Date. The Tender Offer is not conditioned upon any minimum amount of Notes being tendered.
In April 2019, the Company raised an aggregate of
As of June 3, 2024, the date of the commencement of the Tender Offer, the
Following the Company’s Exercise of the issuance right, the Company will:
(i) |
issue |
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(ii) |
waive its right to repurchase the 2029 Notes; and |
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(iii) |
direct the trustee of Trust I to dissolve Trust I in accordance with its declaration of trust and deliver the 2029 Notes to the beneficial holders of the 2029 P-Caps pro rata in respect of each 2029 P-Cap, which is expected to occur on or before June 11, 2024 (the “Exchange Date”). |
Upon delivery through The Depository Trust Company (“DTC”) on the Exchange Date, the beneficial holders of the 2029 P-Caps will become beneficial holders of the 2029 Notes and be eligible to tender their 2029 Notes in the Tender Offer. The 2029 P-Caps are not subject to the Tender Offer and beneficial holders of the 2029 P-Caps must wait until DTC updates their position on the Exchange Date to reflect beneficial ownership of the 2029 Notes before they can participate in the Tender Offer. Any questions or requests for assistance with respect to the tender of the 2029 Notes may be directed to Global Bondholder Services Corporation, the Tender and Information Agent for the Tender Offer, at the address and telephone numbers on the back cover of the Offer to Purchase.
Alongside the Tender Offer, the Company also announced its intention to raise more contingent liquidity via the contemplated issuance of new pre-capitalized trust securities from Pine Street Trust III. This offering, when combined with the Exercise of the 2029 P-Caps, will allow the Company to increase and extend its contingent liquidity profile in a higher rate environment than that of February 2019 (which was the date of the original issuance of the 2029 P-Caps) and at a lower ongoing cost.
The amounts of each Series of Notes that are purchased in the Tender Offer will be determined in accordance with the priorities identified in the column Acceptance Priority Level in the table above and will be subject to the Series Cap. The Tender Offer will expire at 5:00 p.m.,
The applicable Total Tender Offer Consideration for each
In addition to the applicable Total Tender Offer Consideration or applicable Late Tender Offer Consideration, as the case may be, accrued and unpaid interest up to, but not including, the applicable Settlement Date will be paid in cash on all validly tendered Notes accepted for purchase in the Tender Offer. The purchase price plus accrued and unpaid interest for Notes that are validly tendered and not validly withdrawn on or before the Early Tender Deadline and accepted for purchase will be paid by the Company in same day funds promptly following the Early Tender Deadline (the “Early Settlement Date”). The Company expects that the Early Settlement Date will be June 20, 2024, the third business day after the Early Tender Deadline. The purchase price plus accrued and unpaid interest for Notes that are validly tendered after the Early Tender Deadline and on or before the Expiration Date and accepted for purchase will be paid by the Company in same day funds promptly following the Expiration Date (the “Final Settlement Date”). The Company expects that the Final Settlement Date will be July 5, 2024, the second business day after the Expiration Date, assuming Notes representing an aggregate purchase price equal to the Maximum Aggregate Purchase Price are not purchased on the Early Settlement Date. No tenders will be valid if submitted after the Expiration Date. If Notes are validly tendered and not validly withdrawn having an aggregate purchase price equal to or greater than the Maximum Aggregate Purchase Price as of the Early Tender Deadline, Holders who validly tender Notes after the Early Tender Deadline but on or before the Expiration Date will not have any of their Notes accepted for purchase, subject to the Series Cap. Holders of Notes subject to the Tender Offer who validly tender their Notes on or before the Early Tender Deadline may not withdraw their Notes after 5:00 p.m.,
Subject to the Maximum Aggregate Purchase Price and the Series Cap, all Notes validly tendered and not validly withdrawn at or before the Early Tender Deadline having a higher Acceptance Priority Level will be accepted before any validly tendered and not validly withdrawn Notes having a lower Acceptance Priority Level, and all Notes validly tendered after the Early Tender Deadline having a higher Acceptance Priority Level will be accepted before any Notes tendered after the Early Tender Deadline having a lower Acceptance Priority Level. However, if Notes are validly tendered and not validly withdrawn having an aggregate purchase price less than the Maximum Aggregate Purchase Price as of the Early Tender Deadline, Notes validly tendered and not validly withdrawn at or before the Early Tender Deadline, subject to the Series Cap, will be accepted for purchase in priority to Notes tendered after the Early Tender Deadline, even if such Notes tendered after the Early Tender Deadline have a higher Acceptance Priority Level than Notes validly tendered and not validly withdrawn at or before the Early Tender Deadline. Notes of the Series in the last Acceptance Priority Level accepted for purchase in accordance with the terms and conditions of the Tender Offer may be subject to proration so that the Company will only accept for purchase Notes having an aggregate purchase price of up to the Maximum Aggregate Purchase Price.
From time to time, the Company may purchase additional Notes in the open market, in privately negotiated transactions, through tender offers or otherwise, or may redeem Notes pursuant to the terms of the applicable indenture governing the applicable Series of Notes. Any future purchases or redemptions may be on the same terms or on terms that are more or less favorable to Holders of Notes than the terms of the Tender Offer. Any future purchases by the Company will depend on various factors existing at that time. There can be no assurance as to which, if any, of these alternatives (or combinations thereof) the Company may choose to pursue in the future. The effect of any of these actions may directly or indirectly affect the price of any Notes that remain outstanding after the consummation or termination of the Tender Offer.
Notwithstanding any other provision of the Tender Offer, the Company’s obligation to accept for purchase, and to pay for, Notes validly tendered and not validly withdrawn, if applicable, pursuant to the Tender Offer (up to the Maximum Aggregate Purchase Price, the Series Cap and subject to proration) is subject to, and conditioned upon, the satisfaction of or, where applicable, its waiver of, the General Conditions and the Financing Condition.
TD Securities (
This press release is neither an offer to purchase nor a solicitation of an offer to sell the Notes. The Tender Offer is made only by the Offer to Purchase and the information in this press release is qualified by reference to the Offer to Purchase dated June 3, 2024. There is no separate letter of transmittal in connection with the Offer to Purchase. None of the Company, the Company’s Board of Directors, the Lead Dealer Manager, the Dealer Managers, the Tender Agent and Information Agent or the trustees with respect to any Notes is making any recommendation as to whether holders should tender any Notes in response to the Tender Offer, and neither the Company nor any such other person has authorized any person to make any such recommendation. Holders must make their own decision as to whether to tender any of their Notes, and, if so, the principal amount of Notes to tender.
About Equitable Holdings
Equitable Holdings, Inc. (NYSE: EQH) is a leading financial services holding company comprised of complementary and well-established businesses, Equitable, AllianceBernstein and Equitable Advisors. Equitable Holdings has
Reference to the 1859 founding applies specifically and exclusively to Equitable Financial Life Insurance Company (NY, NY).
Note Regarding Forward-Looking Statements:
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “expects,” “believes,” “anticipates,” “intends,” “seeks,” “aims,” “plans,” “assumes,” “estimates,” “projects,” “should,” “would,” “could,” “may,” “will,” “shall” or variations of such words are generally part of forward-looking statements. Forward-looking statements are made based on management’s current expectations and beliefs concerning future developments and their potential effects upon Equitable Holdings, Inc. (“Holdings”) and its consolidated subsidiaries. These forward-looking statements include, but are not limited to, statements regarding projections, estimates, forecasts and other financial and performance metrics and projections of market expectations. “We,” “us” and “our” refer to Holdings and its consolidated subsidiaries, unless the context refers only to Holdings as a corporate entity. There can be no assurance that future developments affecting Holdings will be those anticipated by management. Forward-looking statements include, without limitation, all matters that are not historical facts.
These forward-looking statements are not a guarantee of future performance and involve risks and uncertainties, and there are certain important factors that could cause actual results to differ, possibly materially, from expectations or estimates reflected in such forward-looking statements, including, among others: (i) conditions in the financial markets and economy, including the impact of geopolitical conflicts and related economic conditions, equity market declines and volatility, interest rate fluctuations, impacts on our goodwill and changes in liquidity and access to and cost of capital; (ii) operational factors, including reliance on the payment of dividends to Holdings by its subsidiaries, protection of confidential customer information or proprietary business information, operational failures by us or our service providers, potential strategic transactions, changes in accounting standards, and catastrophic events, such as the outbreak of pandemic diseases including COVID-19; (iii) credit, counterparties and investments, including counterparty default on derivative contracts, failure of financial institutions, defaults by third parties and affiliates and economic downturns, defaults and other events adversely affecting our investments; (iv) our reinsurance and hedging programs; (v) our products, structure and product distribution, including variable annuity guaranteed benefits features within certain of our products, variations in statutory capital requirements, financial strength and claims-paying ratings, state insurance laws limiting the ability of our insurance subsidiaries to pay dividends and key product distribution relationships; (vi) estimates, assumptions and valuations, including risk management policies and procedures, potential inadequacy of reserves and experience differing from pricing expectations, amortization of deferred acquisition costs and financial models; (vii) our Investment Management and Research segment, including fluctuations in assets under management and the industry-wide shift from actively-managed investment services to passive services; (viii) recruitment and retention of key employees and experienced and productive financial professionals; (ix) subjectivity of the determination of the amount of allowances and impairments taken on our investments; (x) legal and regulatory risks, including federal and state legislation affecting financial institutions, insurance regulation and tax reform; (xi) risks related to our common stock and (xii) general risks, including strong industry competition, information systems failing or being compromised and protecting our intellectual property.
Forward-looking statements, including any financial guidance, should be read in conjunction with the other cautionary statements, risks, uncertainties and other factors identified in Holdings’ filings with the Securities and Exchange Commission. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update or revise any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events, except as otherwise may be required by law.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240602752698/en/
Investor Relations
Erik Bass
(212) 314-2476
IR@equitable.com
Media Relations
Sophia Kim
(212) 314-2010
mediarelations@equitable.com
Source: EQH Investor Relations
FAQ
What is the total amount Equitable Holdings is offering to purchase in the tender offer?
When is the early tender deadline for Equitable Holdings’ tender offer?
When does Equitable Holdings’ tender offer expire?
What is the early tender premium offered by Equitable Holdings?
Which series of notes has the highest acceptance priority in Equitable Holdings’ tender offer?
What conditions must be met for Equitable Holdings’ tender offer to proceed?
