NewtekOne, Inc. Completes Offering of $71.875 Million of 8.50% Fixed Rate Senior Notes Due 2029
NewtekOne announced the completion of a public offering of $71.875 million in 8.50% Fixed Rate Senior Notes due 2029. The company received $69,718,750 in proceeds before expenses. The Notes mature on June 1, 2029, and can be redeemed starting June 1, 2027, at 100% of the principal plus accrued interest. The interest rate is 8.50% annually, payable quarterly. The Notes trade on Nasdaq under 'NEWTG'. Proceeds will fund investments, repay debt, and support general corporate purposes.
Joint book-running managers included Keefe, Bruyette & Woods, Raymond James & Associates, and B. Riley Securities. Barry Sloane, President and CEO, highlighted the strong demand and increased capital raise. He noted the company's solid financial performance with a ROAA of 2.8% and ROTCE of 20.6% in Q1 2024.
- Completed $71.875 million public offering.
- Received $69,718,750 in proceeds before expenses.
- 8.50% fixed interest rate on the Notes.
- Notes are redeemable starting June 1, 2027.
- Proceeds to fund investments and repay debt.
- Solid financial performance: 2.8% ROAA and 20.6% ROTCE in Q1 2024.
- Offering increases company debt load.
- Expenses associated with the offering reduce proceeds.
- High interest rate on the Notes may increase financial burden.
Insights
NewtekOne's recent offering of $71.875 million in 8.50% fixed rate senior notes, maturing in 2029, is a significant move, particularly in the current interest rate environment. The 8.50% interest rate is notably high, reflecting either investor demand for higher returns or perceived risk. This rate, payable quarterly, could be attractive in a high-inflation environment where fixed-income investors seek predictable income.
The company's plan to use the proceeds for funding investments, debt repayment and general corporate purposes could positively impact its financial health. Reducing existing debt with potentially lower-cost capital might improve their interest coverage ratio and overall leverage. However, investors should be mindful that if the investments don't yield expected returns, the high coupon on these notes could become burdensome.
Given the favorable metrics reported such as a 2.8% return on average assets (ROAA) and a 20.6% return on tangible common equity (ROTCE), the issuance seems well-timed. These metrics suggest efficient use of assets and strong equity returns, which can instill investor confidence regarding the company's ability to service this debt. Long-term, careful management of these proceeds will be important to ensure it remains accretive to earnings.
NewtekOne's decision to increase the capital raise from $50 million to $71.875 million due to excess demand indicates strong investor confidence in the company. This appetite for the Notes suggests a favorable market perception of NewtekOne's creditworthiness and business strategy. Listing the Notes on the Nasdaq Global Market under the symbol 'NEWTG' also provides liquidity, which is a positive for investors seeking easy exit options.
The intended use of proceeds, particularly for funding investments in their alternative loan program through joint ventures, highlights an aggressive growth strategy. This could potentially open new revenue streams and diversify income sources. However, market conditions and execution risks should be monitored. For example, if economic conditions worsen or if the loan program underperforms, it could strain the company's financials.
Additionally, the fixed rate structure of the Notes can be beneficial against rising interest rates but could be a disadvantage if rates fall, potentially leading to higher costs of capital compared to market rates.
BOCA RATON, Fla., June 05, 2024 (GLOBE NEWSWIRE) -- NewtekOne, Inc. (Nasdaq: NEWT), announced that it completed a registered public offering of
The Notes are listed on the Nasdaq Global Market® under the trading symbol “NEWTG.” The Company intends to use the proceeds from the sale of the Notes for funding of investments, repayment of existing debt and general corporate purposes. Keefe, Bruyette & Woods, A Stifel Company, Raymond James & Associates, Inc, and B. Riley Securities, Inc. acted as joint book-running managers for the Offering. Janney Montgomery Scott LLC and Compass Point Research & Trading, LLC acted as co-managers for the Offering.
Barry Sloane, President, Chairman and CEO commented, “We could not be more pleased with our current execution and forecasted return on issuing publicly traded five-year Notes to the debt capital markets. Due to the excess demand for these Notes, we increased our capital raise from
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, Technology Solutions (Cloud Computing, Data Backup, Storage and Retrieval, IT Consulting), eCommerce, Accounts Receivable Financing & Inventory Financing, Insurance Solutions, Web Services, and Payroll and Benefits Solutions.
Newtek®, NewtekOne®, Newtek Bank®, National Association, Your Business Solutions Company® and One Solution for All Your Business Needs® 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. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. These statements are not guarantees of future results or occurrences and are subject to change, possibly materially. See “Note Regarding Forward-Looking Statements” and the sections entitled “Risk Factors” in the Company's 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: Jayne Cavuoto
Telephone: (212) 273-8179 / jcavuoto@newtekone.com
FAQ
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