PulteGroup, Inc. Announces Launch of Tender Offers for Senior Notes
PulteGroup, a key player in the construction industry, announced a tender offer for its debt securities up to $300 million. The tender includes 5.5% Senior Notes due 2026 and 5.0% Senior Notes due 2027. Investors who tender their securities by May 30, 2024, will receive early tender payments of $50 per $1,000 principal amount. The tender offer expires on June 14, 2024, with payment anticipated by June 18, 2024. J.P. Morgan is managing the offer, and Global Bondholder Services is the information agent. The offer is not contingent on any minimum tender amount or the completion of other offers.
- PulteGroup offers to repurchase up to $300 million in debt, potentially reducing long-term liabilities.
- Early tender participants receive an additional $50 per $1,000 principal amount, incentivizing participation.
- J.P. Morgan's involvement adds credibility and professionalism to the tender offer process.
- Early settlement option on June 4, 2024, could provide quicker liquidity for participating investors.
- The tender cap of $300 million may not cover the total outstanding principal of $889.1 million, leaving significant debt.
- Holders tendering after the early deadline receive lower compensation compared to early participants.
- Potential proration of tendered securities could lead to partial acceptance, reducing the attractiveness of the offer.
- Interest penalties apply if the tendered securities are not accepted or withdrawn.
Insights
PulteGroup's tender offer for up to
This move can be seen as a way to manage interest expenses, particularly with the early tender payment incentives, suggesting a goal to minimize future interest payouts. However, the tender offer cap means not all noteholders may be able to tender their notes, which might lead to some dissatisfaction among investors.
For long-term bond investors, understanding that these actions might tighten liquidity in PulteGroup’s debt instruments is crucial. Additionally, if the tender offer is oversubscribed, the pro-rata allocation could impact the return expectations of participating bondholders.
Rating: 1
Analyzing how PulteGroup’s strategy fits within broader market trends is vital. The tender offer comes at a time when many companies are leveraging low-interest environments to restructure or reduce their debt. This tactic aligns with an industry-wide movement aimed at optimizing financial structures as interest rates start to rise again.
Retail investors should note that tender offers often reflect confidence in the company’s cash flow and operational strength. By offering to buy back bonds, PulteGroup is likely signaling that it believes it can generate sufficient returns from its core operations to cover the repurchase without jeopardizing future projects or financial stability.
Moreover, the acceptance priority levels indicate a strategic approach to handling different maturities, likely aimed at balancing near and mid-term fiscal pressures. This offer also suggests a potential shift in how PulteGroup plans to allocate its capital, moving perhaps towards more equity-based or alternative financing methods.
Rating: 1
Tender Offers for up to
Title of Security |
CUSIP No./ISIN No. |
Principal Amount Outstanding |
Acceptance Priority Level(1) |
Early Tender
Payment
|
Reference Security |
Bloomberg Reference Page |
Fixed Spread |
Notes due 2026 |
745867AW1 / US745867AW12 |
|
1 |
|
|
FIT4 |
50 bps |
Notes due 2027 |
745867AX9 / US745867AX94 |
|
2 |
|
|
FIT5 |
50 bps |
|
|
|
|
|
|
|
|
(1) |
The offers with respect to the Securities (as defined below) are subject to the Aggregate Tender Cap (as defined below) of |
|
(2) |
Per |
|
(3) |
The Total Consideration (as defined below) for Securities (as defined below) validly tendered at or prior to the Early Tender Date (as defined below) and accepted for purchase will be calculated using the applicable Fixed Spread (as defined below) and is inclusive of the Early Tender Payment (as defined below). |
The tender offers consist of offers to purchase for cash, on the terms and subject to the conditions set forth in the offer to purchase, dated May 16, 2024 (as the same may be amended or supplemented from time to time, the “Offer to Purchase”), the Company’s
The tender offers for the Securities will expire at 5:00 p.m.,
The applicable consideration (the “Total Consideration”) offered for each
In addition to the Total Consideration or the Late Tender Offer Consideration, as applicable, all holders of Securities accepted for purchase will also receive accrued and unpaid interest on Securities validly tendered and accepted for purchase from the applicable last interest payment date up to, but not including, the applicable settlement date (“Accrued Interest”), payable on such settlement date.
Each tender offer will expire on the Expiration Date. Except as set forth below, payment for the Securities that are validly tendered at or prior to the Expiration Date and that are accepted for purchase will be made on a date promptly following the Expiration Date, which is currently anticipated to be June 18, 2024, the second business day after the Expiration Date. The Company reserves the right, in its sole discretion, to make payment for Securities that are validly tendered at or prior to the Early Tender Date and that are accepted for purchase on an earlier settlement date, which, if applicable, is currently anticipated to be June 4, 2024, the second business day after the Pricing Date.
Tendered Securities may be validly withdrawn at or prior to, but not after, 5:00 p.m.,
The tender offers are subject to the satisfaction or waiver by the Company of certain conditions as set forth in the Offer to Purchase. The tender offers are not conditioned upon the tender of any minimum principal amount of the Securities, and neither of the tender offers is conditioned on the consummation of the other tender offer.
Information Relating to the Tender Offers
The Offer to Purchase is being distributed to holders beginning today. J.P. Morgan is the dealer manager for the tender offers. Investors with questions regarding the tender offers may contact J.P. Morgan at (866) 834-4666 (toll-free) or (212) 834-7489 (collect). Global Bondholder Services Corporation is the tender and information agent for the tender offers and can be contacted at (855) 654-2015 (toll-free) (bankers and brokers can call collect at (212) 430-3774) or by email at contact@gbsc-usa.com.
None of the Company or its affiliates, their respective boards of directors, the dealer manager, the tender and information agent or the trustee with respect to any Securities is making any recommendation as to whether holders should tender any Securities in response to any of the tender offers, and neither the Company nor any such other person has authorized any person to make any such recommendation. Holders must make their own decision as to whether to tender any of their Securities, and, if so, the principal amount of Securities to tender.
Holders are urged to evaluate carefully all information in this Offer to Purchase, including the documents incorporated by reference herein, consult their own investment and tax advisors and make their own decisions whether to tender some or all of their Securities. If a holder holds Securities through a custodian bank, broker, dealer, commercial bank, trust company or other nominee, it should contact such custodian or nominee if it wishes to tender its Securities.
The full details of the tender offers, including complete instructions on how to tender Securities, are included in the Offer to Purchase. Holders are strongly encouraged to read carefully the Offer to Purchase, including materials incorporated by reference therein, because they will contain important information. The Offer to Purchase may be obtained from Global Bondholder Services Corporation, free of charge, by calling toll-free at (855) 654-2015 (toll-free) (bankers and brokers can call collect at (212) 430-3774) or by email at contact@gbsc-usa.com
About PulteGroup
PulteGroup, Inc. (NYSE: PHM), based in
For more information about PulteGroup, Inc. and PulteGroup brands, go to pultegroup.com; pulte.com; centex.com; delwebb.com; divosta.com; jwhomes.com; and americanwesthomes.com. Follow PulteGroup, Inc. on X: @PulteGroupNews.
Forward-Looking Statements
This communication contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements reflect the views of the Company’s management regarding current expectations and projections about future events and are based on currently available information. Actual results could differ materially from those contained in these forward-looking statements for a variety of reasons, including, but not limited to, those discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, Part I, ITEM 1A, “Risk Factors,” as well as those discussed in the Offer to Purchase. Risks such as interest rate changes and the availability of mortgage financing; the impact of any changes to our strategy in responding to the cyclical nature of the industry or deteriorations in industry changes or downward changes in general economic or other business conditions, including any changes regarding our land positions and the levels of our land spend; economic changes nationally or in our local markets, including inflation, deflation, changes in consumer confidence and preferences and the state of the market for homes in general; labor supply shortages and the cost of labor; the availability and cost of land and other raw materials used by us in our homebuilding operations; a decline in the value of the land and home inventories we maintain and resulting possible future writedowns of the carrying value of our real estate assets; competition within the industries in which we operate; governmental regulation directed at or affecting the housing market, the homebuilding industry or construction activities, slow growth initiatives and/or local building moratoria; the availability and cost of insurance covering risks associated with our businesses, including warranty and other legal or regulatory proceedings or claims; damage from improper acts of persons over whom we do not have control or attempts to impose liabilities or obligations of third parties on us; weather related slowdowns; the impact of climate change and related governmental regulation; adverse capital and credit market conditions, which may affect our access to and cost of capital; the insufficiency of our income tax provisions and tax reserves, including as a result of changing laws or interpretations; the potential that we do not realize our deferred tax assets; our inability to sell mortgages into the secondary market; uncertainty in the mortgage lending industry, including revisions to underwriting standards and repurchase requirements associated with the sale of mortgage loans, and related claims against us; risks related to information technology failures, data security issues and the effect of cybersecurity incidents and threats; the impact of negative publicity on sales; failure to retain key personnel; the impairment of our intangible assets; the disruptions associated with the COVID-19 pandemic (or another epidemic or pandemic or similar public threat or fear of such an event), and the measures taken to address it; and other factors of national, regional and global scale, including those of a political, economic, business and competitive nature could have a material adverse effect on our business, financial condition and results of operations. Other unknown or unpredictable factors also could have a material adverse effect on the Company’s business, financial condition and results of operations. Accordingly, readers should not place undue reliance on these forward-looking statements. The use of words such as believe,” “expect,” “intend,” “estimate,” “anticipate,” “plan,” “project,” “may,” “can,” “could,” “might,” “should,” “will” and similar expressions, among others, generally identify forward-looking statements; however, these words are not the exclusive means of identifying such statements. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. These forward-looking statements are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Accordingly, you should not place undue reliance on those statements. The Company is not under any obligation to, and does not intend to, publicly update or review any forward-looking statement or other statement in this communication, the Offer to Purchase or in any related supplement the Company prepares or authorizes or in any documents incorporated by reference into the Offer to Purchase, whether as a result of new information, future events or otherwise, even if experience or future events make it clear that any expected results expressed or implied by these forward-looking statements will not be realized. Please carefully review and consider the various disclosures made in this communication, the Offer to Purchase and in the Company’s reports filed with the SEC that attempt to advise interested parties of the risks and factors that may affect the Company’s business, prospects and results of operations.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240516404959/en/
James Zeumer
404.978.6434
Jim.Zeumer@pultegroup.com
Source: PulteGroup, Inc.
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