HP Inc. Announces Redemption of Notes

Rhea-AI Summary

HP Inc. (NYSE: HPQ) announced the redemption of all remaining Global Notes, totaling approximately $867.5 million, on July 22, 2020. This includes $472.3 million of 3.750% Notes due December 1, 2020, and $395.2 million of 4.300% Notes due June 1, 2021. Notices will be sent by The Bank of New York Mellon Trust Company. This move is part of HP's strategy to strengthen its balance sheet, which includes a recent $3 billion public offering of senior unsecured notes and the establishment of a new $1 billion revolving credit facility. The actions aim to enhance financial flexibility and support future investments.

Positive

• Strengthening of the balance sheet through the redemption of approximately $867.5 million in Global Notes.
• Completion of a $3 billion public offering of senior unsecured notes, enhancing liquidity.
• Established a new $1 billion revolving credit facility, increasing total credit facilities to $5 billion.

Negative

• None.

PALO ALTO, Calif., June 23, 2020 (GLOBE NEWSWIRE) -- HP Inc. (NYSE: HPQ) has announced that it will redeem all of its remaining $472,342,000 3.750% Global Notes due December 1, 2020 and all of its remaining $395,178,000 4.300% Global Notes due June 1, 2021 (collectively, the “Notes” and such transaction, the “Redemption”) that are outstanding on July 22, 2020.  The redemption price of the Notes will be 100% of the principal amount plus a make-whole premium and accrued and unpaid interest to, but excluding, the redemption date, in each case in accordance with the terms and subject to the conditions of the respective Notes and the indenture governing the Notes. 

Notices of redemption are being sent by The Bank of New York Mellon Trust Company, N.A., the trustee for the Notes, to all currently registered holders of the Notes.

This announcement completes a series of recent proactive actions HP has taken to solidify its balance sheet, including:

• HP’s repurchase of approximately $682.5 million aggregate principal amount of its outstanding: (i) 3.750% Global Notes due December 1, 2020; (ii) 4.300% Global Notes due June 1, 2021; (iii) 4.375% Global Notes due September 15, 2021; and (iv) 4.650% Global Notes due December 9, 2021, pursuant to offers to purchase for cash (the “Tender Offers”), which settled on June 19, 2020.
• The successful pricing on June 10, 2020 and closing on June 17, 2020 of HP’s underwritten public offering of $3.0 billion aggregate principal amount of senior unsecured notes, consisting of $1.15 billion aggregate principal amount of its 2.200% notes due 2025; $1.0 billion aggregate principal amount of its 3.000% notes due 2027; and $850.0 million aggregate principal amount of its 3.400% notes due 2030.  Of the $3.0 billion note issuance, approximately $0.7 billion of the net proceeds from the offering have been used for the Tender Offers and approximately $0.9 billion will be used for the Redemption, resulting in a net cash increase of approximately $1.4 billion.
• Entering on May 29, 2020 into a new 364-day senior, unsecured revolving credit facility with aggregate lending commitments of $1.0 billion.  Combined with HP’s existing $4.0 billion revolving credit facility due March 30, 2023, HP now has aggregate credit facilities totaling $5.0 billion and commercial paper issuance capacity of up to $6.0 billion.

“HP’s balance sheet is a source of strength for the company and a key part of our overall company strategy,” said Zac Nesper, HP’s Treasurer. “Our prudent financial policy, commitment to an investment grade rating and access to the debt capital markets enable HP to make value-creating investments through a disciplined, returns-based framework.”

This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of any securities of HP in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful.

Forward-looking statements
This press release contains forward-looking statements based on current expectations and assumptions that involve risks and uncertainties.  If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results of HP and its consolidated subsidiaries may differ materially from those expressed or implied by such forward-looking statements and assumptions.

All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including, but not limited to, any statements regarding the potential impact of the COVID-19 pandemic and the actions by governments, businesses and individuals in response to the situation; projections of net revenue, margins, expenses, effective tax rates, net earnings, net earnings per share, cash flows, benefit plan funding, deferred taxes, share repurchases, foreign currency exchange rates or other financial items; any projections of the amount, timing or impact of cost savings or restructuring and other charges, planned structural cost reductions and productivity initiatives; any statements of the plans, strategies and objectives of management for future operations, including, but not limited to, our business model and transformation, our sustainability goals, our go-to-market strategy, the execution of restructuring plans and any resulting cost savings, net revenue or profitability improvements or other financial impacts; any statements concerning the expected development, performance, market share or competitive performance relating to products or services; any statements regarding current or future macroeconomic trends or events and the impact of those trends and events on HP and its financial performance; any statements regarding pending investigations, claims or disputes; any statements of expectation or belief, including with respect to the timing and expected benefits of acquisitions and other business combination and investment transactions; and any statements of assumptions underlying any of the foregoing.  Forward-looking statements can also generally be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “will,” “would,” “could,” “can,” “may,” and similar terms.

Risks, uncertainties and assumptions include factors relating to the effects of the COVID-19 pandemic and the actions by governments, businesses and individuals in response to the situation, the effects of which may give rise to or amplify the risks associated with many of these factors listed here; HP’s ability to execute on its strategic plan, including the recently announced initiatives, business model changes and transformation; execution of planned structural cost reductions and productivity initiatives; HP’s ability to complete any contemplated share repurchases, other capital return programs or other strategic transactions; the need to address the many challenges facing HP’s businesses; the competitive pressures faced by HP’s businesses; risks associated with executing HP’s strategy and business model changes and transformation; successfully innovating, developing and executing HP’s go-to-market strategy, including online, omnichannel and contractual sales, in an evolving distribution and reseller landscape; the development and transition of new products and services and the enhancement of existing products and services to meet customer needs and respond to emerging technological trends; successfully competing and maintaining the value proposition of HP’s products, including supplies; the need to manage third-party suppliers, manage HP’s global, multi-tier distribution network, limit potential misuse of pricing programs by HP’s channel partners, adapt to new or changing marketplaces and effectively deliver HP’s services; challenges to HP’s ability to accurately forecast inventories, demand and pricing, which may be due to HP’s multi-tiered channel, sales of HP’s products to unauthorized resellers or unauthorized resale of HP’s products; integration and other risks associated with business combination and investment transactions; the results of the restructuring plans, including estimates and assumptions related to the cost (including any possible disruption of HP’s business) and the anticipated benefits of the restructuring plans; the protection of HP’s intellectual property assets, including intellectual property licensed from third parties; the hiring and retention of key employees; the impact of macroeconomic and geopolitical trends and events; risks associated with HP’s international operations; the execution and performance of contracts by HP and its suppliers, customers, clients and partners; disruptions in operations from system security risks, data protection breaches, cyberattacks, extreme weather conditions, medical epidemics or pandemics such as the COVID-19 pandemic, and other natural or manmade disasters or catastrophic events; the impact of changes in tax laws; potential liabilities and costs from pending or potential investigations, claims and disputes; and other risks that are described in HP’s Annual Report on Form 10-K for the fiscal year ended October 31, 2019, HP’s Quarterly Reports on Form 10-Q for the fiscal quarters ended January 31, 2020 and April 30, 2020, and HP’s other filings with the Securities and Exchange Commission (the “SEC”).

As in prior periods, the financial information set forth in this document, including any tax-related items, reflects estimates based on information available at this time.  While HP believes these estimates to be reasonable, these amounts could differ materially from reported amounts in HP’s Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2020, Annual Report on Form 10-K for the fiscal year ended October 31, 2020 and HP’s other filings with the SEC.  The forward-looking statements in this press release are made as of the date of this press release and HP assumes no obligation and does not intend to update these forward-looking statements.

HP’s Investor Relations website at investor.hp.com contains a significant amount of information about HP, including financial and other information for investors.  HP encourages investors to visit its website from time to time, as information is updated, and new information is posted.  The content of HP’s website is not incorporated by reference into this press release or in any other report or document HP files with the SEC, and any references to HP’s website are intended to be inactive textual references only.

About HP Inc. 

HP Inc. creates technology that makes life better for everyone, everywhere. Through our product and service portfolio of personal systems, printers and 3D printing solutions, we engineer experiences that amaze. More information about HP Inc. is available at hp.com.

© Copyright 2020  HP Development Company, L.P. The information contained herein is subject to change without notice. The only warranties for HP products and services are set forth in the express warranty statements accompanying such products and services. Nothing herein should be construed as constituting an additional warranty. HP shall not be liable for technical or editorial errors or omissions contained herein.

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FAQ

When will HPQ redeem its remaining Global Notes?

HPQ will redeem its remaining Global Notes on July 22, 2020.

What is the total amount of HPQ's Global Notes being redeemed?

The total amount of HPQ's Global Notes being redeemed is approximately $867.5 million.

What are the maturity dates for the Global Notes being redeemed by HPQ?

The 3.750% Notes mature on December 1, 2020, and the 4.300% Notes mature on June 1, 2021.

How much liquidity did HPQ gain from its recent public offering?

HPQ gained approximately $1.4 billion in net cash increase from its recent public offering and related transactions.