CPI Card Group Inc. Announces Proposed Private Offering of $285 Million of Senior Secured Notes
CPI Card Group announced a private offering of $285 million in senior secured notes due 2029 through its subsidiary, CPI CG. The proceeds will be used to redeem the company’s 8.625% senior secured notes due 2026 and cover related costs. This offering, targeting institutional buyers, is subject to market conditions and may not be completed. The notes will be guaranteed by CPI and its domestic subsidiaries, and will be secured by most of their assets. The offering is private and not registered under the Securities Act. No public offer or solicitation is involved.
- CPI Card Group plans to redeem higher-interest 2026 notes, potentially lowering interest costs.
- The new notes offer a longer maturity date, pushing debt obligations to 2029.
- The offering is subject to market conditions, creating uncertainty about its completion.
- The company is incurring additional fees, premiums, and expenses related to the redemption of the 2026 notes.
Insights
CPI Card Group Inc.'s proposed private offering of
Senior secured notes are a type of debt security that is backed by collateral, making them less risky compared to unsecured notes. The fact that these notes are due 2029 extends the company’s debt maturity profile, providing more time to manage and plan their financials without immediate repayment pressure.
However, the success of this offering depends on market conditions at the time of issuance. If the broader market is volatile or interest rates rise unexpectedly, the terms of the notes might not be as favorable as desired, impacting the cost savings the company aims to achieve.
For investors, it’s essential to monitor how the market reacts to this offering. If successful, it could signal the company’s strategic financial management and improving credit profile, leading to potential stock price appreciation. However, if the offering fails or terms are unfavorable, it could reflect negatively on the company's financial health.
The move to initiate a private offering of senior secured notes rather than a public offering indicates CPI Card Group Inc. is targeting institutional investors, who often seek higher yields and are able to conduct more in-depth due diligence compared to retail investors. This strategic choice suggests the company is confident in its ability to meet its obligations and sees attractive terms with institutional backing.
By using the proceeds to redeem higher-interest notes, CPI is not only looking to reduce interest expenses but also to extend the maturity of its debt. This reflects a proactive approach to debt management, which is generally seen positively by credit rating agencies and can improve investor confidence.
Investors should note that refinancing existing debt with new debt is a common strategy to improve financial flexibility, but it should be assessed within the broader context of the company's financial health and market conditions. Keeping an eye on the performance of the company post-offering will provide insights into the efficacy of this financial maneuver.
The issuer intends to use the net proceeds from the offering, together with cash on hand, to redeem all of the issuer’s outstanding
The notes are expected to be general senior secured obligations of the issuer and guaranteed by the Company and all of its current and future wholly-owned domestic subsidiaries (other than the issuer) and will be secured by substantially all of the assets of the issuer and the guarantors, subject to customary exceptions.
The notes and related guarantees will be offered only to persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), or outside
This press release shall 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 private offering memorandum, and are not being made to any person in any jurisdiction in which such offer, sale or solicitation is unlawful. Nothing in this press release shall constitute a notice of redemption to the holders of the 2026 notes or an offer to redeem or repurchase any of the 2026 notes. Any such notice or offer, if any, will only be made in accordance with the provisions of the indenture governing the 2026 notes.
Forward-Looking Statements
Certain statements and information in this press release (as well as information included in other written or oral statements we make from time to time) may contain or constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. The words “believe,” “estimate,” “project,” “expect,” “anticipate,” “plan,” “intend,” “foresee,” “should,” “would,” “could,” “continue,” “committed,” “attempt,” “aim,” “target,” “objective,” “guides,” “seek,” “focus,” “provides guidance,” “provides outlook” or other similar expressions are intended to identify forward-looking statements, which are not historical in nature. These forward-looking statements relate to, among other things, expectations regarding the proposed offering and the use of proceeds therefrom. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effect on us and other information currently available. Such forward-looking statements, because they relate to future events, are by their very nature subject to many important risks and uncertainties that could cause actual results or other events to differ materially from those contemplated. Risks and uncertainties that could cause actual results or other events to differ materially from those expressed or implied by these forward-looking statements include, but are not limited to: a deterioration in general economic conditions, including inflationary conditions and resulting in reduced consumer confidence and business spending, and a decline in consumer credit worthiness impacting demand for our products; the unpredictability of our operating results, including an inability to anticipate changes in customer inventory management practices and its impact on our business; a disruption or other failure in our supply chain, including as a result of foreign conflicts and with respect to single source suppliers, or the failure or inability of suppliers to comply with our code of conduct or contractual requirements, or political unrest in countries in which our suppliers operate, or inflationary pressures, resulting in increased costs and inability to pass those costs on to our customers and extended production lead times and difficulty meeting customers’ delivery expectations; our failure to retain our existing customers or identify and attract new customers; our inability to recruit, retain and develop qualified personnel, including key personnel, and implement effective succession processes; adverse conditions in the banking system and financial markets, including the failure of banks and financial institutions; system security risks, data protection breaches and cyber-attacks; interruptions in our operations, including our information technology systems, or in the operations of the third parties that operate computing infrastructure on which we rely; our inability to develop, introduce and commercialize new products and services; the usage, or lack thereof, of artificial intelligence technologies; our substantial indebtedness, including inability to make debt service payments or refinance such indebtedness; the restrictive terms of our indebtedness and covenants of future agreements governing indebtedness and the resulting restraints on our ability to pursue our business strategies; our status as an accelerated filer and complying with the Sarbanes-Oxley Act of 2002 and the costs associated with such compliance and implementation of procedures thereunder; our failure to maintain effective internal control over financial reporting; disruptions in production at one or more of our facilities; problems in production quality, materials and process and costs relating to product defects and any related product liability and/or warranty claims; environmental, social and governance (“ESG”) preferences and demands of various stakeholders and our ability to conform to such preferences and demands and to comply with any related regulatory requirements; the effects of climate change, negative perceptions of our products due to the impact of our products and production processes on the environment and other ESG-related risks; damage to our reputation or brand image; disruptions in production due to weather conditions, climate change, political instability or social unrest; our inability to adequately protect our trade secrets and intellectual property rights from misappropriation, infringement claims brought against us and risks related to open source software; defects in our software and computing systems; our limited ability to raise capital; costs and impacts to our financial results relating to the obligatory collection of sales tax and claims for uncollected sales tax in states that impose sales tax collection requirements on out-of-state businesses or unclaimed property, as well as potential new
We caution and advise readers not to place undue reliance on forward-looking statements, which speak only as of the date hereof. These statements are based on assumptions that may not be realized and involve risks and uncertainties that could cause actual results to differ materially from the expectations and beliefs contained herein. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise, except as required by law.
About CPI Card Group Inc.
CPI Card Group is a payments technology company providing a comprehensive range of credit, debit, and prepaid card and digital solutions, including Software-as-a-Service (SaaS) instant issuance. With a focus on building personal relationships and earning trust, we help our customers navigate the constantly evolving world of payments, while delivering innovative solutions that spark connections and support their brands. We serve clients across industry, size, and scale through our team of experienced, dedicated employees and our network of high-security production and card services facilities—located in
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CPI Card Group Inc. Investor Relations:
(877) 369-9016
InvestorRelations@cpicardgroup.com
CPI Card Group Inc. Media Relations:
Media@cpicardgroup.com
Source: CPI Card Group
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