PHINIA Announces Proposed Private Offering of $400,000,000 of Senior Notes due 2032

Rhea-AI Summary

PHINIA Inc. (NYSE: PHIN) has announced plans for a private offering of $400 million in unsecured senior notes due 2032, subject to market conditions. The notes will be guaranteed by PHINIA's subsidiaries that guarantee its credit facilities and 6.75% senior secured notes due 2029. The net proceeds will be used to repay outstanding borrowings under the company's term loan A facility, cover offering-related expenses, and for general corporate purposes. The notes are being offered only to qualified institutional buyers under Rule 144A and non-U.S. persons under Regulation S, as they are not registered under the Securities Act or state securities laws.

Positive

• Raising $400 million through senior notes offering
• Repayment of outstanding borrowings under term loan A facility
• Potential improvement in debt structure and liquidity

Negative

• Increase in long-term debt obligations
• Potential impact on interest expenses
• to qualified institutional buyers and non-U.S. persons

Financial Analyst

PHINIA's proposed $400 million senior notes offering is a significant move to restructure its debt profile. By using the proceeds to repay term loan A borrowings, the company aims to extend its debt maturity and potentially secure more favorable terms. This strategy could improve PHINIA's financial flexibility and reduce near-term refinancing risks.

However, investors should note that this is essentially a debt-for-debt swap, not reducing overall leverage. The unsecured nature of these new notes might indicate a slightly higher interest rate compared to the secured term loan being repaid. The impact on annual interest expenses and cash flow will be important to monitor.

The additional funds for "general corporate purposes" provide a financial cushion but also warrant scrutiny on how management deploys this capital. Overall, this refinancing move suggests proactive financial management, but its long-term benefit depends on the final terms and subsequent capital allocation decisions.

Legal Expert

The private offering structure of PHINIA's notes is a common approach for expediting the fundraising process while avoiding the extensive regulatory requirements of a public offering. By targeting qualified institutional buyers under Rule 144A and non-U.S. persons under Regulation S, PHINIA can efficiently access capital markets.

However, this approach limits the liquidity and transferability of the notes, as they can't be freely traded in public markets. Investors should be aware that these restrictions could impact the notes' secondary market value.

The inclusion of subsidiary guarantees for the notes is a positive legal feature, potentially enhancing their credit quality. However, the exact terms of these guarantees and their ranking relative to other obligations will be important details in the final offering documents. Investors should carefully review these terms to understand their rights and the notes' position in PHINIA's capital structure.

AUBURN HILLS, Mich.--(BUSINESS WIRE)-- PHINIA Inc. (“PHINIA,” “we,” “our” or the “Company”) (NYSE: PHIN) announced today that it is planning, subject to market and other customary conditions, to offer (the “Offering”) $400 million aggregate principal amount of its unsecured senior notes due 2032 (the “notes”) in a private offering that is exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”).

The notes will be guaranteed by each of the Company’s subsidiaries that guarantees its credit facilities and its 6.75% senior secured notes due 2029.

The Company intends to use the net proceeds of the Offering to repay all of its outstanding borrowings under its term loan A facility, to pay fees and expenses in connection with the Offering, and for general corporate purposes.

The notes have not been and will not be registered under the Securities Act or any state securities laws, and may not be offered or sold in the United States or to U.S. persons absent registration or an applicable exemption from such registration requirements. Accordingly, the notes are being offered and sold only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act and to certain non-U.S. persons in transactions outside the United States in reliance on Regulation S under the Securities Act.

This press release does not constitute an offer to sell or the solicitation of an offer to buy, nor will there be any sale of, the notes in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the U.S. federal securities laws. Forward-looking statements are statements other than historical fact that provide current expectations or forecasts of future events based on certain assumptions and are not guarantees of future performance. Forward-looking statements use words such as “anticipate,” “believe,” “continue,” “could,” “designed,” “effect,” “estimate,” “evaluate,” “expect,” “forecast,” “goal,” “initiative,” “intend,” “likely,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “pursue,” “seek,” “should,” “target,” “when,” “will,” “would,” or other words of similar meaning.

Forward-looking statements, particularly those relating to the Offering of the notes, the use of proceeds therefrom, the expected closing date of the Offering and the ability to successfully complete the Offering within the expected time frame or at all, are subject to risks, uncertainties, and factors relating to our business and operations, all of which are difficult to predict and which could cause our actual results to differ materially from the expectations expressed in or implied by such forward-looking statements. Risks, uncertainties, and factors that could cause actual results to differ materially from those implied by these forward-looking statements include, but are not limited to: adverse changes in general business and economic conditions, including recessions, adverse market conditions or downturns impacting the vehicle and industrial equipment industries; our ability to deliver new products, services and technologies in response to changing consumer preferences, increased regulation of greenhouse gas emissions, and acceleration of the market for electric vehicles; competitive industry conditions; failure to identify, consummate, effectively integrate or realize the expected benefits from acquisitions or partnerships; pricing pressures from original equipment manufacturers (“OEMs”); inflation rates and volatility in the costs of commodities used in the production of our products; changes in U.S. and foreign administrative policy, including changes to existing trade agreements and any resulting changes in international trade relations; our ability to protect our intellectual property; failure of or disruption in our information technology infrastructure, including a disruption related to cybersecurity; our ability to identify, attract, retain and develop a qualified global workforce; difficulties launching new vehicle programs; failure to achieve the anticipated savings and benefits from restructuring and product portfolio optimization actions; extraordinary events (including natural disasters or extreme weather events), political disruptions, terrorist attacks, pandemics or other public health crises, and acts of war; risks related to our international operations; the impact of economic, political, and market conditions on our business in China; our reliance on a limited number of OEM customers; supply chain disruptions; work stoppages, production shutdowns and similar events or conditions; governmental investigations and related proceedings regarding vehicle emissions standards, including the ongoing investigation into diesel defeat devices; current and future environmental and health and safety laws and regulations; the impact of climate change and regulations related to climate change, including evolving greenhouse gas emissions regulations in California, the U.S. in general and European Union; liabilities related to product warranties, litigation and other claims; compliance with legislation, regulations, and policies, investigations and legal proceedings, and changes in and new interpretations of existing rules and regulations; tax audits and changes in tax laws or tax rates taken by taxing authorities; volatility in the credit market environment; impairment charges on goodwill and indefinite-lived intangible assets; the impact of changes in interest rates and asset returns on our pension funding obligations; the impact of restrictive covenants and requirements in the agreements governing our indebtedness on our financial and operating flexibility; our ability to achieve some or all of the benefits that we expect to achieve from our spin-off from BorgWarner Inc. (the “Spin-Off”); other risks relating to the Spin-Off, including a determination that the Spin-Off does not qualify as tax-free for U.S. federal income tax purposes, restrictions and obligations under the tax matters agreement, and our or BorgWarner Inc.’s failure to perform under, and any dispute relating to, the various transaction agreements; our ability to consummate the Offering of the notes; and other risks and uncertainties described in our reports filed from time to time with the Securities and Exchange Commission.

We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are made. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Category: IR

View source version on businesswire.com: https://www.businesswire.com/news/home/20240910384089/en/

IR contact:

Kellen Ferris

Vice President, Investor Relations

investor@phinia.com

+1 947-262-5256

Media contact:

Kevin Price

Global Brand & Communications Director

media@phinia.com

+44 (0) 7795 463871

Source: PHINIA INC

FAQ

What is the size of PHINIA's proposed senior notes offering?

PHINIA (NYSE: PHIN) is proposing a private offering of $400 million aggregate principal amount of unsecured senior notes due 2032.

How does PHINIA plan to use the proceeds from the senior notes offering?

PHINIA intends to use the net proceeds to repay all outstanding borrowings under its term loan A facility, pay fees and expenses related to the offering, and for general corporate purposes.

Who are the eligible investors for PHINIA's senior notes offering?

The notes are being offered only to qualified institutional buyers under Rule 144A and certain non-U.S. persons in transactions outside the United States under Regulation S.

What is the maturity date of PHINIA's proposed senior notes?

The proposed unsecured senior notes offered by PHINIA (NYSE: PHIN) are due in 2032.