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

Rhea-AI Summary

StoneX Group Inc. announces the pricing of $550 million in Senior Secured Notes due 2031 in a private offering. The Notes bear an interest rate of 7.875% and are offered to qualified institutional buyers and certain persons outside the United States.

Insights

Financial Analyst

The issuance of $550 million in 7.875% Senior Secured Notes due 2031 by StoneX Group Inc. represents a significant capital raising activity that can have a material impact on the company's financial structure. The relatively high interest rate of 7.875% indicates a premium that the company is willing to pay to attract investors, which could be reflective of the current market conditions or the company's credit rating. Investors will assess the company's ability to service this debt, especially in an environment where interest rates may rise, potentially increasing the cost of future debt servicing.

Secured notes suggest that creditors will have a claim on certain assets of the company in the event of default, which provides a degree of protection. However, this also means that the company is leveraging its assets, which could limit future borrowing capacity. The use of private offerings to qualified institutional buyers and persons outside the US suggests a targeted strategy to engage investors who are capable of large-scale investments and perhaps more familiar with such financial instruments.

Market Research Analyst

In the broader context of the financial markets, the offering by StoneX Group Inc. may signal a strategic move to capitalize on current market conditions or to refinance existing debt. The impact on the stock market will hinge on investor perception of the company's long-term growth prospects and the anticipated use of the proceeds from the note offering. If the capital is used for growth initiatives that are expected to yield a high return, the market may react favorably.

Conversely, if the market interprets this as a sign of financial distress or merely a tactic to manage existing liabilities without clear growth strategies, the reaction could be less positive. The specific terms of the notes, such as the high interest rate, will be scrutinized against industry norms and the current interest rate environment to gauge investor appetite and the potential impact on StoneX's stock performance.

Legal Expert

The use of Rule 144A and Regulation S indicates a sophisticated legal structuring of the offering, designed to comply with the Securities Act of 1933 while also reaching a global pool of investors. This dual approach allows StoneX Group Inc. to navigate the regulatory landscape effectively, providing access to capital from U.S. institutional investors and international markets. The legal framework surrounding such offerings is complex and the company must adhere to strict disclosure and compliance requirements.

The success of the offering will depend on the company's ability to convey the value and security of the investment, as well as its adherence to the legal stipulations of the offering. Any deviation from these regulations could result in significant legal challenges and impact investor confidence, thus affecting the company's market valuation and stock performance.

NEW YORK, Feb. 15, 2024 (GLOBE NEWSWIRE) -- StoneX Group Inc. (the “Company”; NASDAQ: SNEX), today announced the pricing 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 are being offered 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 offering is expected to close on or about March 1, 2024, subject to customary closing conditions.

The Company intends to use the net proceeds from the sale of the Notes, together with cash on hand, to (i) fund the redemption in full of the Company's 8.625% Senior Secured Notes due 2025, (ii) repay in full current borrowings under the Company's senior secured revolving credit facility, and (iii) pay related fees and expenses associated with the foregoing.

The Notes will be 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 will be 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 will be 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 to be entered into by the collateral agent for the Notes and the agent for the Company's senior secured revolving credit facility. The Notes are expected to 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 will be 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 closing of the offering and 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 aggregate principal amount of the Senior Secured Notes offered by StoneX Group Inc.?

StoneX Group Inc. announced the pricing of $550 million in aggregate principal amount of 7.875% Senior Secured Notes due 2031.

What is the interest rate on the Senior Secured Notes offered by StoneX Group Inc.?

The Senior Secured Notes offered by StoneX Group Inc. bear an interest rate of 7.875%.

To whom are the Notes being offered?

The Notes and the related Note guarantees are being offered 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.

When is the offering expected to close?

The offering of the Senior Secured Notes by StoneX Group Inc. is expected to close on or before the specified date.