Resideo Announces Upsize and Pricing Of 6.500% Senior Notes Due 2032
Resideo Technologies (NYSE: REZI) announced an increase in its private offering of 6.500% Senior Notes due 2032, raising the aggregate principal amount to $600 million, an upsize of $100 million from its initial plan. The Notes are priced at 100% of their principal amount and are guaranteed by Resideo and its subsidiaries. The proceeds will repay part of the company's senior secured Term B loans maturing in February 2028. The offering is expected to close on July 17, 2024, subject to standard closing conditions. The Notes will be available to qualified institutional buyers under Rule 144A and to non-U.S. investors under Regulation S.
- Resideo increased its note offering to $600 million, $100 million more than initially planned.
- The 6.500% Senior Notes are fully guaranteed by Resideo and its subsidiaries, enhancing investor confidence.
- Proceeds will be used to repay part of the company's senior secured Term B loans, improving its debt structure.
- The Notes are not registered under the Securities Act, limiting their marketability.
Insights
Resideo Technologies' announcement of the upsizing and pricing of $600 million in 6.500% Senior Notes due 2032 is a key financial move that offers several critical insights for investors. The increase from the previously announced $500 million to $600 million indicates strong market demand for these notes, allowing Resideo to capitalize on favorable conditions. The
This capital raise is strategically aimed at refinancing existing debt, specifically the Term B loans maturing in 2028. By refinancing now, Resideo can potentially lock in favorable rates and extend its debt maturity profile, which is beneficial for long-term financial health and liquidity management.
Short-term implications include a possible increase in debt levels, which might raise leverage ratios temporarily. However, the move can enhance financial flexibility by reducing near-term debt obligations. This could be seen as a positive management strategy aimed at optimizing the capital structure.
In the long term, the successful offering and refinancing could lower overall interest expenses and support sustained growth initiatives, enhancing shareholder value. Investors should monitor how the capital is deployed and whether it translates to operational efficiencies and growth.
It's also important to note that these notes are only offered to qualified institutional buyers, limiting accessibility to retail investors. However, the terms and success of this offering can positively affect the secondary market perception of Resideo's existing securities.
The issuance of these Senior Notes by Resideo Technologies reflects a strategic maneuver to navigate current market conditions and demand. The upsize to
By targeting the institutional market exclusively under Rule 144A and Regulation S, Resideo ensures compliance with stringent regulations while tapping into a sophisticated investor base. This strategy could minimize liquidity risk and ensures that the notes are placed in the hands of investors who can fully understand and manage such investments.
The broader market implication is that other firms in related sectors might follow suit if they observe the success of this issuance, particularly in a rate environment where securing long-term, fixed-rate debt is advantageous. It’s a tactical move reflecting effective capital market utilization and investor relations.
For retail investors, while direct investment opportunities in these notes are limited, observing the company's ability to raise such capital and manage its debt maturity schedule can instill confidence in its overall financial strategy and stability. This can bode well for resale values and market perceptions of related securities.
Investors should remain vigilant about the execution of this strategy and the broader economic conditions that could impact interest rates and debt markets.
The Company intends to use the net proceeds from the sale of the Notes to repay a portion of the outstanding indebtedness under the Company's senior secured Term B loans maturing on February 21, 2028.
The sale of the Notes is expected to close on July 17, 2024, subject to the satisfaction or waiver of customary closing conditions.
The Notes are being offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), and outside
This press release does not constitute an offer to sell, or the solicitation of an offer to buy, the Notes, the related guarantees or any other security, and shall not constitute an offer, solicitation or sale of any securities in any state or jurisdiction in which, or to any persons to whom, such offering, solicitation or sale would be unlawful.
About Resideo
Resideo is a leading global manufacturer and developer of technology-driven products and components that provide critical comfort, energy management, and safety and security solutions to over 150 million homes globally. Through our ADI Global Distribution business, we are also a leading wholesale distributor of professionally installed electronic security and life safety products for commercial and residential markets and serve a variety of adjacent product categories including audio visual, data communications, and smart home solutions.
Forward-Looking Statements
This release contains "forward-looking statements," including statements relating to the proposed offering and the anticipated use of the net proceeds from the offering. All statements, other than statements of fact, that address activities, events or developments that we or our management intend, expect, project, believe or anticipate will or may occur in the future are forward-looking statements. Although we believe forward-looking statements are based upon reasonable assumptions, such statements involve known and unknown risks and uncertainties, which may cause the actual results or performance of the Company to differ materially from such forward-looking statements. Such risks and uncertainties include, but are not limited to, (1) our ability to achieve our outlook regarding the second quarter 2024 and full year 2024, (2) our ability to recognize the expected savings from, and the timing and impact of, our existing and anticipated cost reduction actions, and our ability to optimize our portfolio and operational footprint, (3) the amount of our obligations and nature of our contractual restrictions pursuant to, and disputes that have or may hereafter arise under the agreements we entered into with Honeywell International Inc. in connection with our spin-off, (4) risks related to our recently completed acquisitions including our ability to achieve the targeted amount of annual cost synergies and successfully integrate the acquired operations (including successfully driving category growth in connected offerings), (5) the ability of Resideo to drive increased customer value and financial returns and enhance strategic and operational capabilities as a result of the completion of the Snap One Holdings Corp. ("Snap One") transaction, (6) the ability of Resideo to achieve the targeted amount of synergies and the related valuation implications arising from the Snap One transaction, (7) the accretive nature of the Snap One transaction to Resideo's non-GAAP EPS in the first full year of ownership and the growth and margin profile of the combined businesses, (8) the ability to accelerate brand strategy as a result of the Snap One transaction, (9) the ability to integrate the Snap One business into Resideo and realize the anticipated strategic benefits of the transaction, including the anticipated operational and strategic benefits of the transaction, and (10) the other risks described under the headings "Risk Factors" and "Cautionary Statement Concerning Forward-Looking Statements" in our Annual Report on Form 10-K for the year ended December 31, 2023 and other periodic filings we make from time to time with the Securities and Exchange Commission. Forward-looking statements are not guarantees of future performance, and actual results, developments, and business decisions may differ from those envisaged by our forward-looking statements. Except as required by law, we undertake no obligation to update such statements to reflect events or circumstances arising after the date of this press release and we caution investors not to place undue reliance on any such forward-looking statements.
Contacts:
Resideo Investors:
Jason Willey
Vice President, Investor Relations
investorrelations@resideo.com
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SOURCE Resideo Technologies, Inc.
FAQ
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