OpenText Announces Pricing of Senior Unsecured Fixed Rate Notes to Redeem Outstanding 2026 Notes

Rhea-AI Summary

Open Text Corporation (NASDAQ: OTEX) announced the pricing of $1.5 billion in senior unsecured fixed rate notes, up from the previously reported $1.0 billion. The offerings include $850 million in 3.875% notes due 2029 and $650 million in 4.125% notes due 2031. The proceeds will primarily be used to redeem OpenText's outstanding 5.875% notes due 2026, amounting to $850 million, along with a $25 million make-whole premium. The transaction is expected to close on November 24, 2021, subject to customary conditions.

Positive

• Raise of $1.5 billion in senior unsecured fixed rate notes indicates strong market demand.
• Redemption of higher-interest 5.875% notes due 2026 lowers future interest expense.

Negative

• The necessity to issue new debt could indicate liquidity concerns.
• Potential risks associated with the reliance on market conditions for completing the offerings.

WATERLOO, ON, Nov. 9, 2021 /PRNewswire/ -- Open Text Corporation (NASDAQ: OTEX) (TSX: OTEX) ("OpenText" or the "Company") announced today that it has priced the offerings of $1.5 billion in total aggregate principal amount of senior unsecured fixed rate notes by OpenText and Open Text Holdings, Inc., a wholly-owned indirect U.S. subsidiary of OpenText ("OTHI"). The offerings were upsized from the previously announced $1.0 billion total aggregate principal amount.

OpenText intends to use the substantial portion of the net proceeds from the offerings to (i) redeem in full the outstanding $850 million aggregate principal amount of OpenText's 5.875% notes due 2026 (the "2026 Notes") and pay the make-whole premium of $25 million that will be paid in connection with such redemption of the 2026 Notes and (ii) pay related fees and expenses; and OpenText expects to use the balance of the net proceeds for general corporate purposes, including potential future acquisitions.

The offerings consist of $850 million aggregate principal amount of OpenText's 3.875% senior unsecured notes due 2029 (the "OTC notes"), guaranteed initially on a senior unsecured basis by OpenText's existing wholly-owned subsidiaries that borrow or guarantee the Company's obligations under its existing senior credit facilities, and $650 million aggregate principal amount of OTHI's 4.125% senior unsecured notes due 2031 (the "OTHI notes" and collectively with the OTC notes, the "notes"), guaranteed on a senior unsecured basis by OpenText and guaranteed initially by OpenText's existing wholly-owned subsidiaries (other than OTHI) that borrow or guarantee OpenText's obligations under its existing senior credit facilities. The offerings are expected to close on November 24, 2021, subject to customary closing conditions.

The notes and related guarantees will not be registered under the Securities Act of 1933, as amended (the "Securities Act"). The notes and related guarantees may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons, except to persons reasonably believed to be qualified institutional buyers in reliance on the exemption from registration provided by Rule 144A under the Securities Act and to certain persons in offshore transactions in reliance on Regulation S under the Securities Act. The notes and related guarantees will be offered in Canada under available prospectus exemptions.

This press release does not constitute an offer to sell or the solicitation of an offer to buy the notes and related guarantees. Any offers of the notes and related guarantees will be made only by means of a related private offering memorandum with respect to such notes and related guarantees.

This press release shall not constitute a notice of redemption under the indenture governing the 2026 Notes, dated as of May 31, 2016. On November 9, 2021, OpenText delivered to the holders of the 2026 Notes a notice of redemption (the "Notice") that the Company has elected to redeem in full the outstanding $850 million aggregate principal amount of the 2026 Notes on December 9, 2021. The Notice is conditional on the closing of the offerings by OpenText and OTHI described above.

About OpenText

OpenText, The Information Company™, enables organizations to gain insight through market leading information management solutions, powered by OpenText Cloud Editions.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements in this press release may contain words considered forward-looking statements or information under applicable securities laws. These statements are based on OpenText's current expectations, estimates, forecasts and projections about the offerings and the proposed redemption, and the operating environment, economies and markets in which the Company operates. These statements are subject to important assumptions, risks and uncertainties that are difficult to predict, and the actual outcome may be materially different. OpenText's assumptions, although considered reasonable by the Company at the date of this press release, may prove to be inaccurate and consequently its actual results could differ materially from the expectations set out herein. For additional information with respect to risks and other factors which could occur, see OpenText's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and other securities filings with the Securities and Exchange Commission and other securities regulators. Unless otherwise required by applicable securities laws, OpenText disclaims any intention or obligations to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

OTEX-F

Copyright © 2021 Open Text. OpenText is a trademark or registered trademark of Open Text. The list of trademarks is not exhaustive of other trademarks. Registered trademarks, product names, company names, brands and service names mentioned herein are property of Open Text. All rights reserved.

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SOURCE Open Text Corporation

FAQ

What is the amount of notes Open Text is issuing?

Open Text is issuing $1.5 billion in total senior unsecured fixed rate notes.

What will Open Text do with the proceeds from the note offering?

The proceeds will be used to redeem $850 million of 5.875% notes due 2026 and cover related expenses.

When is the expected closing date for Open Text's note offerings?

The offerings are expected to close on November 24, 2021.

What are the interest rates for the new notes issued by Open Text?

The new notes include $850 million at 3.875% due in 2029 and $650 million at 4.125% due in 2031.

What is the risk associated with Open Text's bond offerings?

The bond offerings carry risks related to reliance on market conditions and the potential need for refinancing in the future.