FedEx to Reduce Debt by 11 Percent Following Completion of Strategic Public Offerings

Rhea-AI Summary

FedEx Corp. (NYSE: FDX) has completed offerings totaling $1.75 billion in USD-denominated notes and €1.25 billion in euro-denominated notes. The proceeds will help redeem $5.8 billion of existing debt, reducing its debt obligations by $2.6 billion, or 11%. This move will eliminate near-term debt maturities through fiscal 2025 and enhance liquidity. Notably, the offerings include an eight-year €600M sustainability bond, marking a significant milestone as the first sustainability bond issued by a North American transportation and logistics company.

Positive

• Net debt reduction of $2.6 billion, improving the balance sheet by 11%.
• Elimination of all near-term debt maturities until fiscal year 2025 and one tranche in fiscal year 2027.
• Issuance of the first sustainability bond in North American transportation, supporting carbon neutrality goals.

Negative

• None.

FedEx Corp. (NYSE: FDX) today announced the completion of the offerings of $1.75 billion of USD-denominated notes and €1.25 billion of euro-denominated notes.

A portion of the proceeds of the debt offerings, which received strong market support, will be used with existing cash to redeem $5.8 billion of the company’s existing debt. This will eliminate near-term debt obligations taken on during the early stages of the COVID-19 pandemic. An additional portion carries historical significance for the company and the industry, representing the first sustainability bond ever issued by a North American transportation and logistics company.

Key features of the transactions include:

• Substantial Overall Debt Reduction. The debt offerings and subsequent redemptions, which will be completed later this month, represent the largest series of related debt transactions in company history and will result in the net reduction of $2.6 billion in FedEx debt obligations. Eliminating these obligations will effectively reduce the company’s total debt portfolio by 11 percent and significantly strengthen its balance sheet, taking advantage of a favorable interest rate environment.
• Elimination of Near-Term Debt Maturities. Using proceeds from the debt offerings and existing cash, FedEx will eliminate all debt maturities through fiscal year 2025 and one tranche in fiscal year 2027, strengthening the company’s balance sheet and providing liquidity and flexibility in the coming years.
• Flexibility for the Future. FedEx will maintain its strong liquidity and cash position, providing flexibility in a still-challenging macroeconomic environment even as total outstanding obligations are materially reduced.

Additionally, the offerings include an eight-year, €600M sustainability bond tranche in Europe. This is the first sustainability bond issued by a North American transportation and logistics company and is one of the ways FedEx will fund its efforts to achieve its goal of carbon neutral operations by 2040. Additional information about the many ways FedEx is committed to helping create a sustainable future for commerce is available on the company’s sustainability website, which includes more details about its approach to sustainable financing.

About FedEx Corp.

FedEx Corp. (NYSE: FDX) provides customers and businesses worldwide with a broad portfolio of transportation, e-commerce and business services. With annual revenue of $79 billion, the company offers integrated business solutions through operating companies competing collectively, operating collaboratively and innovating digitally under the respected FedEx brand. Consistently ranked among the world's most admired and trusted employers, FedEx inspires its more than 570,000 team members to remain focused on safety, the highest ethical and professional standards and the needs of their customers and communities. FedEx is committed to connecting people and possibilities around the world responsibly and resourcefully, with a goal to achieve carbon neutral operations by 2040. To learn more, please visit about.fedex.com.

Certain statements in this press release may be considered forward-looking statements, such as statements relating to management’s views with respect to future events and financial performance and underlying assumptions. Forward-looking statements include those preceded by, followed by or that include the words “will,” “may,” “could,” “would,” “should,” “believes,” “expects,” “anticipates,” “plans,” “estimates,” “targets,” “projects,” “intends” or similar expressions. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to differ materially from historical experience or from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, economic conditions in the global markets in which we operate, our ability to achieve our goal of carbon neutral operations by 2040, constraints, volatility or disruption in the capital markets and our ability to complete debt redemptions; and other factors which can be found in FedEx Corp.’s and its subsidiaries’ press releases and FedEx Corp.’s filings with the Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which it is made. We do not undertake or assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210504005841/en/

FAQ

What is the total amount of debt offerings completed by FedEx?

FedEx completed offerings of $1.75 billion in USD-denominated notes and €1.25 billion in euro-denominated notes.

How much debt will FedEx reduce from its obligations?

FedEx will reduce its debt obligations by $2.6 billion.

What significant bond type did FedEx issue?

FedEx issued an eight-year €600M sustainability bond, the first of its kind by a North American transportation company.

What will be the effect of the new offerings on FedEx's debt maturities?

All near-term debt maturities through fiscal year 2025 will be eliminated.

What is FedEx's goal related to carbon neutral operations?

FedEx aims to achieve carbon neutral operations by 2040.