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

Rhea-AI Summary

StoneX Group Inc. (SNEX) plans to offer $550 million in Senior Secured Notes due 2031 to fund debt repayment and expenses. The Notes will be guaranteed by subsidiaries and secured by assets.

Insights

Financial Analyst

The announcement by StoneX Group Inc. regarding its intention to offer $550 million in Senior Secured Notes due 2031 represents a significant financing event that could impact the company's capital structure and financial flexibility. The decision to redeem the existing 8.625% Senior Secured Notes due 2025 and repay current borrowings under the senior secured revolving credit facility suggests a strategic move to restructure high-interest debt and optimize the company's debt profile. By securing a presumably lower interest rate for the new Notes, StoneX could potentially reduce its interest expenses, thereby improving its net income and financial ratios, which are key metrics for investors and credit rating agencies.

Moreover, the use of second lien secured notes indicates that the company is willing to offer collateral to ensure a lower risk for investors, albeit on a subordinated basis compared to first lien obligations. This could attract a different investor base and affect the company's cost of capital. It is essential for investors to monitor the final terms of the offering, including the interest rate and covenants, as these will have a direct impact on the company's financial commitments and operational flexibility.

Legal Expert

The private offering of Senior Secured Notes to qualified institutional buyers under Rule 144A and to certain non-U.S. persons under Regulation S is a common strategy for U.S. companies to raise capital without the extensive disclosure requirements of a public offering. However, it restricts the pool of potential investors to those who meet specific criteria, which can impact the liquidity and marketability of the Notes. The legal framework of the offering, including the intercreditor agreement that subordinates the Notes to existing and future first lien obligations, is crucial for investors to understand as it outlines the hierarchy of claims in the event of default.

The release provisions of the guarantees, which allow for the release of guarantors under specified circumstances, are also of legal significance. These provisions could alter the risk profile of the Notes over time, depending on changes in the company's structure or the performance of its subsidiaries. Potential investors should closely review the private offering memorandum for details on these legal aspects to assess the inherent risks of the investment.

Market Research Analyst

StoneX Group's move to issue new Senior Secured Notes and retire older, higher-interest debt is reflective of broader market trends where companies seek to capitalize on favorable market conditions to lower their cost of debt. The financial markets' reception to such offerings is contingent on prevailing interest rates, investor appetite for corporate debt and the creditworthiness of the issuer. Given that StoneX is targeting qualified institutional buyers, the success of the offering will depend on these investors' view of the company's long-term prospects and the relative attractiveness of the Notes' yield compared to other investment opportunities.

It is important to note that the company's leverage and the overall health of its balance sheet post-transaction will be closely scrutinized. If StoneX can successfully execute this offering, it may be viewed positively by the market, potentially leading to an improved credit rating and stock performance. Conversely, if market conditions deteriorate or if the company encounters challenges in executing this refinancing strategy, there could be adverse effects on its financial health and investor confidence.

NEW YORK, Feb. 15, 2024 (GLOBE NEWSWIRE) -- StoneX Group Inc. (the "Company"; NASDAQ: SNEX), today announced that it intends to offer, subject to market conditions and other factors, $550 million in aggregate principal amount of Senior Secured Notes due 2031 (the "Notes"). The Notes and the related Note guarantees will be 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 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 semi-annually, in arrears.

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 Company gives no assurance that the proposed offering can be completed on any terms or at all.

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

FAQ

What is StoneX Group Inc. (SNEX) planning to offer?

StoneX Group Inc. (SNEX) plans to offer $550 million in aggregate principal amount of Senior Secured Notes due 2031.

How will StoneX Group Inc. (SNEX) use the proceeds from the Notes sale?

The net proceeds from the sale of the Notes will be used to fund the redemption of existing Senior Secured Notes due 2025, repay current borrowings, and cover related fees and expenses.

How will the Notes be guaranteed?

The Notes will be fully and unconditionally guaranteed, jointly and severally, on a senior secured second lien basis by StoneX Group Inc.'s existing and future subsidiaries.

What will secure the Notes and related guarantees?

The Notes and the related guarantees will be secured on a second priority basis by liens on substantially all of StoneX Group Inc.'s and the guarantors' property and assets.

Are the Notes expected to pay interest?

Yes, the Notes are expected to pay interest semi-annually, in arrears.