Rithm Capital Corp. Announces Proposed Offering of Senior Unsecured Notes

Rhea-AI Summary

Rithm Capital Corp. (RITM) plans to offer $775 million in senior unsecured notes due 2029 to reduce indebtedness and for general corporate purposes. The notes are not registered under the U.S. Securities Act and will be offered to qualified institutional buyers in the U.S. and under Regulation S outside the U.S.

Insights

Financial Analyst

Rithm Capital Corp's announcement of a $775 million senior unsecured notes offering is a significant financial maneuver that aims to optimize the company's capital structure. By directing a portion of the proceeds towards the reduction of existing debt, particularly the tender offer for its 6.250% senior notes due in 2025, Rithm is likely seeking to lower its interest expenses and improve its debt maturity profile.

The choice to issue unsecured notes indicates a level of confidence from the company in its creditworthiness, as these do not require collateral. However, the absence of collateral also typically demands a higher interest rate to compensate for the increased risk to investors. It's essential to consider the interest rate of the new issuance in relation to the current interest rate environment and the company's existing debt to assess the potential impact on Rithm's financial health.

Furthermore, the reliance on Rule 144A and Regulation S for the sale of these notes suggests a targeted approach to sophisticated institutional investors and international buyers, which could indicate a strategic move to diversify the investor base and potentially broaden the company's reach in the global capital market.

Market Research Analyst

The corporate bond market often reacts to new issuances based on the issuer's perceived risk and the terms of the offering. Rithm Capital Corp's issuance of senior unsecured notes could be interpreted by the market as a proactive step in managing its liabilities, which might be received positively if investors believe it will strengthen the company's financial position.

However, the impact on Rithm's stock may vary depending on the final terms of the notes, investor appetite for corporate debt and the broader economic context, including interest rate trends and market liquidity. If the offering is well-received, it could potentially lead to an improvement in the company's credit rating, which often serves as a confidence signal to the market and can have a positive effect on the stock price.

It is also worth noting that unregistered securities typically limit the liquidity for investors, which can influence the demand and pricing of the notes. The market's response to this offering will provide insights into investor sentiment towards the company and the industry as a whole.

Legal Expert

From a legal perspective, the offering of senior unsecured notes by Rithm Capital Corp is subject to specific regulatory frameworks, such as Rule 144A and Regulation S under the Securities Act of 1933. These rules facilitate the sale of securities to qualified institutional buyers and non-U.S. persons, respectively, without the need for a public registration. The adherence to these regulations is crucial to ensure compliance and avoid potential legal ramifications.

Moreover, the exclusion of a public offering highlights the importance of understanding securities law and its implications for both the issuer and the investors. The legal structuring of such offerings often reflects the issuer's strategic considerations, including the desire to streamline the offering process and limit disclosure obligations.

It is also pertinent to observe the legal language used in the press release, which clearly states that it does not constitute an offer to sell or a solicitation of an offer to buy, thereby adhering to legal norms and mitigating the risk of misinterpretation that could lead to regulatory scrutiny.

NEW YORK--(BUSINESS WIRE)--

Rithm Capital Corp. (NYSE: RITM; “Rithm” or the “Company”) announced today that it plans to offer $775 million aggregate principal amount of senior unsecured notes due 2029 (the “notes”). The Company intends to use a portion of the net proceeds from this offering for the reduction of indebtedness, including in connection with the Company’s tender offer for up to $275 million aggregate principal amount of its 6.250% senior unsecured notes due 2025, with the remainder of the net proceeds to be used for general corporate purposes.

The notes have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), any state securities laws or the securities laws of any other jurisdiction, and may not be offered or sold in the United States absent registration or an applicable exemption from registration. Accordingly, the notes are being offered and sold only to, in the United States, persons reasonably believed to be qualified institutional buyers in accordance with Rule 144A under the Securities Act and, outside the United States, in reliance on Regulation S under the Securities Act.

This press release does not constitute an offer to sell, or the solicitation of an offer to buy, any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful.

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 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240303444517/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 Rithm Capital Corp.'s (RITM) plan regarding the senior unsecured notes?

Rithm Capital Corp. (RITM) plans to offer $775 million in senior unsecured notes due 2029.

How does Rithm Capital Corp. (RITM) intend to use the net proceeds from the notes offering?

Rithm Capital Corp. (RITM) intends to use a portion of the net proceeds to reduce indebtedness, including in connection with a tender offer for up to $275 million of its 6.250% senior unsecured notes due 2025, and the remainder for general corporate purposes.

Are the notes being offered registered under the U.S. Securities Act?

No, the notes have not been and will not be registered under the U.S. Securities Act of 1933.

Who are the notes being offered to in the United States and outside the United States?

The notes are being offered and sold only to qualified institutional buyers in the U.S. under Rule 144A and outside the U.S. in reliance on Regulation S under the Securities Act.

Does the press release constitute an offer to sell any security?

No, the press release does not constitute an offer to sell any security and shall not be considered an offer, solicitation, or sale in any jurisdiction where it would be unlawful.