Rithm Capital Corp. Announces Commencement of Tender Offer for 6.250% Senior Unsecured Notes Due 2025
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Insights
Examining Rithm Capital Corp.'s cash tender offer for its 6.250% Senior Unsecured Notes due in 2025, we see a strategic move to manage the company's debt profile. By repurchasing up to $275 million of the $550 million outstanding, Rithm potentially reduces future interest expenses and improves its balance sheet. This action could indicate an attempt to optimize capital structure, which might be viewed favorably by investors and credit rating agencies.
The early tender payment incentive encourages note holders to act promptly, which can be advantageous for Rithm by allowing it to quickly reorganize its debt. However, this comes at a cost, with the company offering an additional $30 per $1,000 principal amount for early participation. The tender offer consideration is set at $970 per $1,000 principal amount, which is below the total consideration of $1,000, reflecting the early tender payment.
It's important to note the Financing Condition, which suggests that Rithm is looking to secure new financing to facilitate this transaction. The terms of the new debt will be critical in evaluating the overall impact of this tender offer on the company's financial health. If the new debt comes with a lower interest rate or more favorable terms, this could be a positive development. Conversely, if the new debt is more expensive or restrictive, it could offset the benefits of the tender offer.
The tender offer by Rithm Capital Corp. may signal broader market trends where companies are taking advantage of the current interest rate environment to refinance existing debt. The offered yield of 6.250% on the 2025 Notes is relatively high in the current low-interest-rate environment, assuming rates have not risen significantly since the issuance of the notes. Companies often undertake such offers to reduce interest payments and lengthen maturities, which can improve liquidity and financial flexibility.
Investors in the fixed-income market will be watching the acceptance rate of the tender offer closely, as it can indicate the market's view on the company's creditworthiness and the attractiveness of the offer relative to alternative investments. High acceptance could imply that note holders see the offer as an opportunity to exit an investment at a favorable price, while low acceptance might suggest that investors prefer to hold onto their notes, possibly due to a lack of better yielding opportunities or confidence in Rithm's credit stability.
The dynamics of the tender offer reflect Rithm Capital Corp.'s approach to liability management. The company's decision to repurchase half of the outstanding 2025 Notes indicates a proactive stance on managing interest rate risk and debt maturities. For debt capital market observers, the structure of the tender offer, including the Early Tender Deadline and the Early Settlement Election, is indicative of Rithm's urgency in conducting the transaction.
Additionally, the Financing Condition is a common clause in such transactions, suggesting that Rithm's ability to complete the offer is contingent upon securing new financing. The terms of this new financing will be scrutinized by the market, as they will affect Rithm's leverage and interest coverage ratios, key metrics for assessing a company's risk profile.
Finally, the engagement of Citigroup Global Markets Inc. as the dealer manager reflects the importance of having experienced intermediaries to facilitate such transactions, ensuring a smooth process and effective communication with note holders.
The Tender Offer will expire at 5:00 p.m.,
Certain information regarding the 2025 Notes and the terms of the Tender Offer is summarized in the table below.
Title of Security |
CUSIP Number(1) |
Principal Amount Outstanding |
Tender Cap |
Total Consideration(2) |
Early Tender Payment(2) |
Tender Offer Consideration(2) |
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64828T AA0 U65228 AA3 |
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|
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(1) |
CUSIPs are provided for the convenience of Holders. No representation is made as to the correctness or accuracy of such numbers. |
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(2) |
Per |
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Each holder who validly tenders, and does not validly withdraw, its 2025 Notes on or prior to 5:00 p.m.,
Holders validly tendering, and not validly withdrawing, 2025 Notes after the Early Tender Deadline and on or before the Expiration Time will be eligible to receive only the tender offer consideration, which represents the total consideration less the early tender payment.
In addition, holders whose 2025 Notes are accepted for payment in the Tender Offer will receive accrued and unpaid interest from the last interest payment date to, but not including, the applicable settlement date for their 2025 Notes purchased pursuant to the Tender Offer. The 2025 Notes tendered prior to 5:00 p.m.,
Subject to the satisfaction or waiver of certain conditions, Rithm reserves the right, following the Early Tender Deadline, to accept for purchase prior to the Expiration Time all 2025 Notes validly tendered on or prior to the Early Tender Deadline (the “Early Settlement Election”). Rithm will announce whether it intends to exercise the Early Settlement Election (the “Early Settlement Announcement”) following the Early Tender Deadline. If Rithm exercises the Early Settlement Election, it will pay the total consideration promptly following the Early Settlement Announcement, which is currently expected to occur on March 19, 2024, subject to all conditions of the Tender Offer having been satisfied or waived by Rithm (the “Early Settlement Date”), plus accrued and unpaid interest on the purchased 2025 Notes from the interest payment date for the 2025 Notes immediately preceding the Early Settlement Date to, but not including, the Early Settlement Date.
Rithm’s obligation to accept for purchase, and to pay for, 2025 Notes validly tendered and not validly withdrawn pursuant to the Tender Offer is subject to the satisfaction or waiver of certain conditions, including, but not limited to, the condition that Rithm shall have completed a debt financing on terms and conditions satisfactory to it (the “Financing Condition”). The complete terms and conditions of the Tender Offer are set forth in the Tender Offer documents that are being sent to holders of 2025 Notes. Holders of 2025 Notes are urged to read the Tender Offer documents carefully.
Rithm has retained Citigroup Global Markets Inc. to act as dealer manager in connection with the Tender Offer. Questions about the Tender Offer may be directed to Citigroup Global Markets Inc. at (800) 558-3745 (toll free) or (212) 723-6106 (collect) or email ny.liabilitymanagement@citi.com. Copies of the Tender Offer documents and other related documents may be obtained from D.F. King & Co., Inc., the tender and information agent for the Tender Offer, at (212) 269-5550 (banks and brokers) or (800) 578-5378 (toll free) or email RITHM@dfking.com.
The Tender Offer is being made solely by means of the Tender Offer documents. Under no circumstances shall this press release constitute an offer to purchase or sell or the solicitation of an offer to purchase or sell the 2025 Notes or any other securities of Rithm or any other person, nor shall there be any offer or sale of any 2025 Notes or other securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. In addition, nothing contained herein constitutes a notice of redemption of the 2025 Notes. No recommendation is made as to whether holders of the 2025 Notes should tender their 2025 Notes.
ABOUT RITHM CAPITAL
Rithm Capital (NYSE: RITM) is a global asset manager focused on real estate, credit and financial services. Rithm makes direct investments and operates several wholly-owned operating businesses. Rithm’s businesses include Sculptor Capital Management, Inc., an alternative asset manager, as well as Newrez LLC, and Genesis Capital LLC, leading mortgage origination and servicing platforms. Rithm seeks to generate attractive risk-adjusted returns across market cycles and interest rate environments. Since inception in 2013, Rithm has delivered approximately
FORWARD-LOOKING STATEMENTS
This communication contains forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements relating to the Company’s intention to issue the notes and the intended use of proceeds of the offering. Forward-looking statements are not historical in nature and can be identified by words such as “believe,” “expect,” “anticipate,” “estimate,” “project,” “plan,” “continue,” “intend,” “should,” “would, “could,” “goal,” “objective,” “will,” “may,” “seek,” or similar expressions or their negative forms. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time and are beyond our control. Forward-looking statements speak only as of the date they are made. Rithm does not assume any duty or obligation (and does not undertake) to update or supplement any forward-looking statements. Because forward-looking statements are, by their nature, to different degrees, uncertain and subject to numerous assumptions, risks and uncertainties, actual results or future events, circumstances or developments could differ, possibly materially, from those that Rithm anticipated in its forward-looking statements, and future results and performance could differ materially from historical performance. Factors that could cause or contribute to such differences include, but are not limited to, those set forth in the section entitled “Risk Factors” in Rithm’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the SEC, and other reports filed by Rithm with the SEC, copies of which are available on the SEC’s website, www.sec.gov. The list of factors presented here is not, and should not be, considered a complete statement of all potential risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements.
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Investor Relations
(212)-850-7770
ir@rithmcap.com
Media
Jon Keehner / Sarah Salky / Erik Carlson
Joele Frank, Wilkinson Brimmer Katcher
(212)-355-4449
ritm-jf@joelefrank.com
Source: Rithm Capital Corp.
FAQ
What is the purpose of Rithm Capital Corp.'s (RITM) cash tender offer?
When does the Tender Offer expire for Rithm Capital Corp. (RITM)?
What is the total consideration per $1,000 principal amount of notes for the Tender Offer by Rithm Capital Corp. (RITM)?
What are the conditions for participating in Rithm Capital Corp.'s (RITM) Tender Offer?
Who is acting as the dealer manager for Rithm Capital Corp.'s (RITM) Tender Offer?
