NewtekOne, Inc. Closes Private Offering of Senior Unsecured Notes

Rhea-AI Summary

NewtekOne (NASDAQ: NEWT) has successfully completed a private offering of $30.0 million in 8.375% notes due 2030. The offering was made to eleven institutional accredited investors, with net proceeds of approximately $29.250 million after expenses.

The company plans to use the proceeds to refinance existing debt, provide capital to Newtek Bank, and for general corporate purposes. Keefe, Bruyette & Woods and Raymond James acted as placement agents.

Additionally, Egan-Jones has upgraded NewtekOne's credit rating from BBB+ to A-, citing the company's healthy shareholders equity to asset ratio, strong tier 1 capital ratio, and improved efficiency ratio. The upgrade applies to all outstanding senior unsecured notes, including NEWTZ, NEWTI, NEWTG, and NEWTH.

Positive

• Credit rating upgraded from BBB+ to A- by Egan-Jones
• Strong financial metrics: healthy shareholders equity to asset ratio
• Robust tier 1 capital ratio and improved efficiency ratio
• Successful $30M note offering completed with institutional investors

Negative

• Additional debt burden with 8.375% interest rate through 2030
• Dilution of existing note holders through new note issuance

Insights

Financial Analyst

NewtekOne's dual announcement represents a meaningful strengthening of its financial foundation through both new capital and external validation of its creditworthiness. The company has successfully completed a $30 million private placement of 8.375% senior unsecured notes maturing in 2030, while simultaneously receiving a credit rating upgrade from Egan-Jones from "BBB+" to "A-".

The rating upgrade is particularly significant as it crosses the threshold from "good" to "high" credit quality territory. Egan-Jones specifically cited NewtekOne's healthy shareholders' equity to asset ratio, strong tier 1 capital ratio, and efficiency ratio improvements as key factors driving the upgrade. This enhanced rating applies across all of the company's publicly traded notes (NEWTZ, NEWTI, NEWTG, and NEWTH), potentially improving investor perception and liquidity in these instruments.

The $29.25 million in net proceeds from the notes offering will primarily refinance existing debt obligations, suggesting the company is extending its debt maturity profile rather than substantially increasing its leverage. The allocation of some proceeds to capitalize Newtek Bank indicates ongoing investment in the company's banking subsidiary, which represents a strategic growth vector.

For a company with a $326 million market capitalization, securing this financing while earning a credit upgrade demonstrates management's ability to strengthen the balance sheet despite its relatively modest size. The 8.375% interest rate reflects both current market conditions and the company's mid-cap financial services profile, but the rating upgrade could potentially lead to more favorable terms on future capital raises.

This transaction effectively extends NewtekOne's debt maturity profile while reinforcing its financial credibility through third-party validation, positioning the company for potentially improved capital markets access as it continues to develop its banking and business services operations.

NewtekOne’s Credit Rating Upgraded by Egan-Jones

BOCA RATON, Fla., March 20, 2025 (GLOBE NEWSWIRE) -- NewtekOne, Inc. (the “Company”) (NASDAQ: NEWT) has completed an exempt offering of $30.0 million aggregate principal amount of its 8.375% notes due 2030 (the “Notes” and the "Offering"). The Offering was consummated pursuant to the terms of a purchase agreement (the “Purchase Agreement”) dated March 19, 2025 between the Company and eleven institutional accredited investors (the “Purchasers”). The Purchase Agreement provided for the Notes to be issued to the Purchasers in a private placement in reliance on Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”). The Notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration. The Notes will mature on April 1, 2030.

Net proceeds from the sale of the Notes were approximately $29.250 million, after deducting estimated offering expenses payable by the Company. The Company intends to use the net proceeds from the sale of the Notes to refinance existing indebtedness, with remaining proceeds, if any, for general corporate purposes (including payment of expenses incurred in connection with the issuance of the Notes, providing capital to Newtek Bank, National Association, and other working capital purposes).

Keefe, Bruyette & Woods, Inc., A Stifel Company and Raymond James & Associates, Inc. acted as placement agents for the Company.

In addition, Egan-Jones Ratings Company ("Egan-Jones") recently upgraded the Company’s credit rating from “BBB+” to "A- ". The rating upgrade applies to the Company and its outstanding senior unsecured notes including the Company’s Nasdaq listed notes: NEWTZ, NEWTI, NEWTG, and NEWTH. Egan-Jones noted the upgrade was based on, among other things, the Company’s healthy shareholders equity to asset ratio, strong tier 1 capital ratio and improvement in efficiency ratio. According to Egan-Jones public disclosures, a rating in the “A” category suggests a “high level of creditworthiness with low sensitivity to evolving credit conditions.”*

Barry Sloane, Chief Executive Officer and President, said, "We are extremely pleased to have received an upgraded rating from a nationally recognized organization such as Egan-Jones. We believe that the rating upgrade reflects the strength of our earnings stream, our well-capitalized balanced sheet, the depth and breadth of our product offerings geared to independent business owners, and our loan portfolio that is diversified by geography and industry."

Egan-Jones is a Nationally Recognized Statistical Rating Organization and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider. Egan-Jones is also certified by the European Securities and Markets Authority.

* Egan-Jones Ratings Company (“EJR”) credit-related and other analyses, including ratings, statements in the Ratings letter are statements of opinion as of the date they are expressed and are not statements of fact. EJR’s opinions and analyses are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. EJR may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities, or from obligors.

Note: A securities rating is not a recommendation to buy, sell or hold securities and may be subject to revision or withdrawal at any time. An explanation of the significance of ratings may be obtained from the rating agencies.

About NewtekOne, Inc.

NewtekOne^®, Your Business Solutions Company^®, is a financial holding company, which along with its bank and non-bank consolidated subsidiaries (collectively, “NewtekOne”), provides a wide range of business and financial solutions under the Newtek^® brand to independent business owners. Since 1999, NewtekOne has provided state-of-the-art, cost-efficient products and services and efficient business strategies to independent business owners across all 50 states to help them grow their sales, control their expenses, and reduce their risk.

NewtekOne’s and its subsidiaries’ business and financial solutions include: banking (Newtek Bank, N.A.), Business Lending, SBA Lending Solutions, Electronic Payment Processing, Accounts Receivable Financing & Inventory Financing, Insurance Solutions and Payroll and Benefits Solutions. In addition, NewtekOne offers its clients the Technology Solutions (Cloud Computing, Data Backup, Storage and Retrieval, IT Consulting and Web Services) provided by Intelligent Protection Management Corp. (IPM.com).

Newtek^®, NewtekOne^®, Newtek Bank^®, National Association, Your Business Solutions Company^®, One Solution for All Your Business Needs^® and Newtek Advantage are registered trademarks of NewtekOne, Inc.

Note Regarding Forward-Looking Statements
Certain statements in this press release are “forward-looking statements” within the meaning of the rules and regulations of the Private Securities Litigation and Reform Act of 1995 are based on the current beliefs and expectations of NewtekOne's management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements. See “Note Regarding Forward-Looking Statements” and the sections entitled “Risk Factors” in our filings with the Securities and Exchange Commission which are available on NewtekOne's website (https://investor.newtekbusinessservices.com/sec-filings) and on the Securities and Exchange Commission’s website (www.sec.gov). Any forward-looking statements made by or on behalf of NewtekOne speak only as to the date they are made, and NewtekOne does not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the date the forward-looking statements were made.

SOURCE: NewtekOne, Inc.

Investor Relations & Public Relations
Contact: Bryce Rowe
Telephone: (212) 273-8292 / browe@newtekone.com

FAQ

What are the terms of NewtekOne's (NEWT) March 2025 note offering?

NewtekOne issued $30 million in 8.375% notes due April 1, 2030, with net proceeds of $29.25 million after expenses.

How will NewtekOne (NEWT) use the proceeds from its 2025 note offering?

The proceeds will be used to refinance existing debt, provide capital to Newtek Bank, and for general corporate purposes.

What is NewtekOne's (NEWT) new credit rating from Egan-Jones as of March 2025?

Egan-Jones upgraded NewtekOne's credit rating from BBB+ to A-, indicating a high level of creditworthiness.

Which NEWT notes are affected by the March 2025 Egan-Jones rating upgrade?

The upgrade applies to all outstanding senior unsecured notes, including NEWTZ, NEWTI, NEWTG, and NEWTH.