StoneX Group Inc. Announces Closing of $550 Million of Senior Secured Notes due 2031

Rhea-AI Summary

StoneX Group Inc. closes $550 million offering of 7.875% Senior Secured Notes due 2031. Notes are fully guaranteed, secured on a second lien basis, and pay interest semiannually at 7.875% per annum.

Insights

Financial Analyst

The issuance of $550 million in Senior Secured Notes by StoneX Group Inc. represents a significant capital raising event that could have implications for the company's financial leverage and interest expense. With a 7.875% interest rate, these notes suggest a higher cost of debt compared to the current low-interest environment, possibly reflecting a risk premium associated with the company. Investors may interpret this as a signal regarding the company's creditworthiness and future cash flow commitments.

Furthermore, the structure of the debt, being senior secured with a second lien, offers creditors a degree of protection, potentially making the notes more attractive despite the higher interest rate. However, it also indicates that the company has prioritized other debts with first liens, which could affect the recovery rate of these note holders in the event of financial distress. The use of the proceeds from this offering, whether for refinancing existing debt, funding acquisitions, or operational expansion, would be critical in assessing the impact on the company's financial position and growth prospects.

Legal Expert

The private offering of the Senior Secured Notes under Rule 144A and Regulation S indicates a targeted approach to sophisticated investors and those outside the United States, bypassing the general public. This method of offering is often used to expedite the capital-raising process and to avoid the more extensive disclosure requirements of a public offering.

The contractual subordination of the notes to first lien obligations through an intercreditor agreement is a key legal structure that investors must understand. It delineates the hierarchy of claims on the company's assets, which could be crucial in a scenario where the company faces financial challenges. Moreover, the fact that the offering was not registered under the Securities Act implies that there are restrictions on the resale of these notes, which could affect their liquidity in the secondary market.

Market Research Analyst

StoneX Group Inc.'s decision to issue high-yield debt may be reflective of broader market conditions and investor appetite for risk. In a market where investors are seeking higher returns, a 7.875% yield could be attractive, especially when secured by company assets. This issuance could be indicative of trends within the financial services industry, where companies may be looking to lock in longer-term financing in anticipation of rising interest rates or economic uncertainty.

Comparing the yield of these notes to industry benchmarks and prevailing economic conditions will provide a more comprehensive understanding of their market reception. Additionally, the performance of these notes post-issuance could serve as a barometer for the market's perception of the company's financial health and the financial sector's stability.

NEW YORK, March 01, 2024 (GLOBE NEWSWIRE) -- StoneX Group Inc. (the “Company”; NASDAQ: SNEX), today announced the closing of its previously-announced offering of $550 million in aggregate principal amount of 7.875% Senior Secured Notes due 2031 (the “Notes”). The Notes and the related Note guarantees were offered and sold in a private offering to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to certain persons outside the United States pursuant to Regulation S under the Securities Act.

The Notes are fully and unconditionally guaranteed, jointly and severally, on a senior secured second lien basis by each of the Company’s existing and future subsidiaries that guarantees indebtedness under the Company’s senior secured revolving credit facility and certain other senior indebtedness. The guarantees are subject to release under specified circumstances. The Notes and the related guarantees are secured on a second priority basis by liens on substantially all of the Company’s and the guarantors’ property and assets, subject to certain exceptions and permitted liens. The liens on the Company’s and the guarantors’ assets that secure the Notes and the related guarantees are contractually subordinated to the liens on the Company’s and the guarantors’ assets that secure the Company’s and the guarantors’ existing and future first lien obligations, including indebtedness under the Company’s senior secured revolving credit facility, as a result of an intercreditor agreement entered into by the collateral agent for the Notes and the agent for the Company’s senior secured revolving credit facility. The Notes pay interest semiannually, in arrears, at a rate of 7.875% per annum.

This press release is neither an offer to sell nor a solicitation of an offer to buy the Notes, the related guarantees or any other security, nor shall there be any offer, solicitation or sale of any securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful. Any offers of the Notes and the related guarantees were made only by means of a private offering memorandum.

The offer and sale of the Notes and related guarantees have not been, and will not be, registered under the Securities Act, or the securities laws of any other jurisdiction, and the Notes and related guarantees may not be offered or sold in the United States absent registration or applicable exemptions from registration requirements.

Cautionary Note Regarding Forward-Looking Statements

Statements in this release that are not historical facts are “forward-looking” statements and “safe harbor statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and/or uncertainties, including those described in the Company’s public filings with the Securities and Exchange Commission. Forward-looking statements are based on management’s current expectations and assumptions and not on historical facts. Examples of these statements include, but are not limited to, the expected use of proceeds. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Therefore, we caution you against relying on any of these forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated in such forward-looking statements include risks and other factors described in the Company’s periodic reports filed with the Securities and Exchange Commission. In providing forward-looking statements, the Company is not undertaking any duty or obligation to update these statements publicly as a result of new information, future events or otherwise, except as required by law. If the Company updates one or more forward- looking statements, no inference should be drawn that it will make additional updates with respect to those other forward-looking statements.

StoneX Group Inc.

Investor inquiries:

Kevin Murphy

(212) 403 - 7296

kevin.murphy@stonex.com

SNEX-G

FAQ

What is the amount of the offering by StoneX Group Inc.?

StoneX Group Inc. closed a $550 million offering of 7.875% Senior Secured Notes due 2031.

What is the interest rate on the Notes issued by StoneX Group Inc.?

The Notes issued by StoneX Group Inc. pay interest semiannually at a rate of 7.875% per annum.

How are the Notes guaranteed by StoneX Group Inc.?

The Notes are fully and unconditionally guaranteed, jointly and severally, on a senior secured second lien basis by each of the Company’s existing and future subsidiaries.

In what manner were the Notes and related guarantees offered by StoneX Group Inc.?

The Notes and related guarantees were offered and sold in a private offering to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, and to certain persons outside the United States pursuant to Regulation S under the Securities Act.

Are the Notes and related guarantees secured by StoneX Group Inc.?

Yes, the Notes and the related guarantees are secured on a second priority basis by liens on substantially all of the Company’s and the guarantors’ property and assets.