Rithm Capital Corp. Announces Early Tender Results for Its 6.250% Senior Unsecured Notes Due 2025

Rhea-AI Summary

Rithm Capital Corp. (NYSE: RITM) announced the results of its cash tender offer to purchase up to $275 million of its 6.250% Senior Unsecured Notes due 2025. Over $483 million of notes were tendered, exceeding the cap, resulting in a prorated acceptance. The settlement date is expected on March 19, 2024, with a total consideration of $1,000 per $1,000 principal amount of notes accepted for purchase.

Insights

Financial Analyst

The announcement by Rithm Capital Corp. regarding its tender offer reflects a strategic financial maneuver aimed at optimizing the company's debt profile. By repurchasing a portion of its 6.250% Senior Unsecured Notes due 2025, Rithm is taking advantage of the current interest rate environment to manage its debt obligations more effectively. The high response rate to the tender offer, with $483.6 million tendered against a $275 million cap, indicates strong investor interest, which could be a signal of market confidence in Rithm's creditworthiness.

From a financial perspective, the repurchase of higher-interest debt could potentially reduce Rithm's interest expenses, assuming the company can refinance the remaining debt at a lower rate, or it is part of a broader capital structure optimization strategy. The proration factor of 56.9% suggests that while investors are keen to participate, they will only partially benefit from the tender offer. This could have mixed effects on the secondary market pricing of the remaining notes. Investors should monitor subsequent interest rate trends and Rithm's refinancing activities to assess the long-term implications of this debt management strategy.

Debt Market Analyst

The tender offer's oversubscription signifies a robust demand for liquidity among note holders, potentially driven by a search for yield in a possibly volatile interest rate environment. The decision not to extend the withdrawal or the early tender deadlines underscores Rithm's commitment to swiftly executing its capital management plans. This could be interpreted as a positive signal to the market, reflecting the company's proactive financial governance.

For remaining note holders, the unchanged terms of the tender offer post-early tender deadline may affect the trading dynamics of the 2025 Notes. The fixed tender cap and the proration could lead to a temporary price adjustment as investors reassess the liquidity and value proposition of the remaining notes. Market participants will likely scrutinize Rithm's future debt management strategies, including potential new issuances or further buybacks, as these actions will influence the supply-demand equilibrium and the overall credit perception of the company.

Market Research Analyst

The tender offer's impact on Rithm's stock market performance will hinge on the perceived benefits of debt reduction versus the cost of the buyback. Investors typically view debt reduction positively, as it can lead to an improved balance sheet and reduced financial risk. However, the cost of the tender offer, including any premium paid over the market rate, must be weighed against these benefits. If the market perceives that Rithm has effectively managed its debt and improved its financial position without overpaying for the buyback, the stock could see a favorable response.

Additionally, the fact that the offer was well-received and the notes were tendered in significant excess of the cap may suggest that the market believes Rithm is on solid footing. This could potentially lead to a positive re-rating of the company's stock as the market digests the implications of the debt repurchase on Rithm's future interest expenses and earnings potential.

NEW YORK--(BUSINESS WIRE)-- Rithm Capital Corp. (NYSE: RITM; “Rithm”) announced today the early tender results of the previously announced cash tender offer (the “Tender Offer”) to purchase up to $275 million aggregate principal amount (the “Tender Cap”) of Rithm’s outstanding 6.250% Senior Unsecured Notes due 2025 (the “2025 Notes”), on the terms and subject to the conditions set forth in the Offer to Purchase, dated March 4, 2024, as amended (the “Offer to Purchase”).

According to D.F. King & Co., Inc., the tender and information agent for the Tender Offer, as of 5:00 p.m., New York City time, on March 15, 2024 (the “Early Tender Deadline”), $483,626,000 aggregate principal amount of the outstanding 2025 Notes were validly tendered and not validly withdrawn. As the aggregate principal amount of the 2025 Notes validly tendered and not validly withdrawn at or prior to the Early Tender Deadline exceeded the Tender Cap, Rithm will accept such 2025 Notes for purchase on a prorated basis as described in the Offer to Purchase.

The table below sets forth certain information regarding the Tender Offer, including the aggregate principal amount of 2025 Notes validly tendered (and not validly withdrawn) as of the Early Tender Deadline, the aggregate principal amount of 2025 Notes that will remain outstanding on the Early Payment Date (as defined below) and the approximate proration factor.

Title of Security		CUSIP Number(1)		Aggregate Principal Amount Outstanding Prior to the Tender Offer			Aggregate Principal Amount Tendered as of the Early Tender Deadline			Aggregate Principal Amount to be Accepted for Purchase			Aggregate Principal Amount Remaining Outstanding			Approximate Proration Factor
6.250% Senior Unsecured Notes due 2025		64828T AA0 U65228 AA3		$	550,000,000		$	483,626,000		$	275,000,000		$	275,000,000		56.9%
______________________________
(1) CUSIPs are provided for the convenience of holders. No representation is made as to the correctness or accuracy of such numbers.

The withdrawal deadline for the Tender Offer was 5:00 p.m., New York City time, on March 15, 2024 (the “Withdrawal Deadline”). Neither the Withdrawal Deadline nor the Early Tender Deadline have been extended. Accordingly, previously tendered 2025 Notes may not be withdrawn, subject to applicable law.

The settlement date for 2025 Notes validly tendered as of the Early Tender Deadline and accepted for purchase is expected to occur on March 19, 2024 (the “Early Payment Date”). On the Early Payment Date, Rithm will pay the total consideration of $1,000 per $1,000 principal amount of 2025 Notes accepted for purchase plus accrued and unpaid interest from and including the interest payment date immediately preceding the Early Payment Date to, but not including, the Early Payment Date.

Rithm will accept for purchase the 2025 Notes validly tendered and not validly withdrawn as of the Early Tender Deadline on a prorated basis, in accordance with the Offer to Purchase. 2025 Notes not accepted for purchase as a result of proration will be rejected from the Tender Offer and will be returned to tendering holders in accordance with the Offer to Purchase.

The Tender Offer is scheduled to expire at 5:00 p.m., New York City time, on April 1, 2024 (the “Expiration Time”), unless extended or earlier terminated by Rithm. However, because the aggregate principal amount of the 2025 Notes validly tendered and not validly withdrawn as of the Early Tender Deadline exceeds the Tender Cap, Rithm does not expect to accept for purchase any 2025 Notes tendered after the Early Tender Deadline.

The Tender Offer is subject to the satisfaction or waiver of certain conditions as described in the Offer to Purchase. The complete terms and conditions of the Tender Offer are set forth in the Offer to Purchase and remain unchanged.

Citigroup Global Markets Inc. is acting 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.

This press release is for informational purposes only and shall not constitute an offer to buy or sell, or the solicitation of any offer to buy or sell, any securities. Any offer or solicitation with respect to the Tender Offer will be made only by means of the Offer to Purchase, and the information in this press release is qualified by reference to the Offer to Purchase. The Tender Offer is not being made to holders of 2025 Notes in any jurisdiction in which the making or acceptance thereof would not be in compliance with the securities, blue sky or other laws of such jurisdiction. In addition, nothing contained herein constitutes a notice of redemption of the 2025 Notes. No recommendation is being made by Rithm and holders of the 2025 Notes must make their own decision as to whether to tender any of their 2025 Notes, and, if so, the principal amount of 2025 Notes to tender.

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 $5.0 billion in dividends to shareholders. Rithm is organized and conducts its operations to qualify as a real estate investment trust (REIT) for federal income tax purposes and is headquartered in New York City.

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 settlement and expiration of the Tender Offer. 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240318809221/en/

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 ticker symbol for Rithm Capital Corp.?

The ticker symbol for Rithm Capital Corp. is RITM.

What was the principal amount set for the Tender Offer by Rithm Capital Corp.?

Rithm Capital Corp. set a Tender Cap of $275 million for the purchase of its 6.250% Senior Unsecured Notes due 2025.

When is the settlement date for the 2025 Notes accepted for purchase?

The settlement date for the 2025 Notes accepted for purchase is expected to occur on March 19, 2024.

What is the total consideration per principal amount of 2025 Notes accepted for purchase?

The total consideration per $1,000 principal amount of 2025 Notes accepted for purchase is $1,000.

Who is acting as the dealer manager in connection with the Tender Offer?

Citigroup Global Markets Inc. is acting as the dealer manager in connection with the Tender Offer by Rithm Capital Corp.