STONECO LTD. ANNOUNCES ANY AND ALL CASH TENDER OFFER AND CONSENT SOLICITATION
StoneCo (Nasdaq: STNE) has initiated a cash tender offer to purchase its outstanding 3.950% senior notes due 2028, totaling $500 million. The offer includes a consent solicitation for amendments to the indenture governing the notes, aiming to eliminate restrictive covenants and allow a substituted debtor. The tender offer provides a total consideration of $880 per $1,000 principal if tendered by July 15, 2024, with an early tender consideration of $30. The offer expires on July 30, 2024, with early and final settlement dates expected around July 17 and July 31, respectively. Withdrawals and consent revocations are allowed until July 15, 2024. Payment includes accrued interest, and broker fees apply under specific conditions. The offer's completion is subject to certain conditions described in the solicitation statement.
- Initiation of a cash tender offer to purchase $500 million of outstanding 3.950% senior notes enhances financial flexibility.
- Early tender consideration of $30 incentivizes early participation, potentially ensuring quicker resolution.
- Elimination of restrictive covenants and various events of default simplifies debt management and improves operational flexibility.
- Potential costs associated with the tender offer and consent solicitation may impact financial standing.
- Risk of not receiving requisite consents which could delay or nullify the amendments to the indenture.
Insights
StoneCo Ltd.'s announcement of a cash tender offer to purchase its outstanding 3.950% senior notes due 2028 is a strategic financial maneuver. Tender offers like this are used by companies to retire debt before maturity, often to take advantage of favorable market conditions or to optimize their balance sheet. Offering
In terms of financial health, retiring debt early can reduce interest expenses, freeing up capital for other investments or operational needs, thus potentially increasing profitability. However, the cash outlay for the tender offer—up to
For stakeholders, the implications are mixed. On one hand, a successful debt reduction can enhance financial stability and investor confidence. On the other hand, the depletion of cash reserves could be viewed negatively if the company does not maintain sufficient liquidity for operational and strategic needs.
Overall, investors should assess how the tender offer aligns with StoneCo's broader financial strategy and balance sheet management, particularly considering the current interest rate environment and the company's long-term growth plans.
The concurrent consent solicitation to amend the indenture governing the notes is a significant legal maneuver. By eliminating restrictive covenants and various events of default, StoneCo aims to achieve greater operational flexibility and reduced legal constraints. This can be beneficial, enabling the company to adapt more swiftly to market conditions without being hampered by existing covenants.
However, there are potential drawbacks to consider. Removing restrictive covenants can increase risk for noteholders, as it may allow the company more leeway in taking on additional debt or engaging in activities that could otherwise be restricted. The proposed amendments also allow the company to substitute the principal debtor, which could alter the risk profile for the noteholders, depending on the financial strength and stability of the substituted debtor.
From a legal standpoint, investors should consider the implications of these changes on their rights and protections. The execution and legal effectiveness of the supplemental indenture depend on achieving the requisite consents and other conditions, adding a layer of complexity and uncertainty to the process.
In summary, while these amendments can provide the company with needed flexibility and operational benefits, they also introduce new levels of risk and uncertainty for noteholders, which should be carefully weighed.
StoneCo's decision to initiate a tender offer and consent solicitation reflects a proactive approach to managing its debt and indicates management's confidence in the company's current financial position. The offer price of
Market reaction to such announcements typically hinges on perceived financial strength and strategic intent. If successful, this tender offer could be viewed as a positive indicator, showing that StoneCo is strategically managing its liabilities to position itself better for future growth. Conversely, if the market perceives the offer as a sign of underlying financial struggles, it could have the opposite effect.
Retail investors should monitor how this tender offer impacts StoneCo's stock price and overall market perception. The tender offer could potentially lead to short-term volatility in the stock as the market digests the implications of reduced debt and the associated use of cash reserves.
Long-term, successful execution of this offer could result in a more robust balance sheet, potentially leading to improved credit ratings and lower cost of capital, which would be beneficial for the company's growth prospects.
In connection with the Tender Offer, the Company is also soliciting consents (the "Consents") from registered holders (each, a "Holder" and, collectively, the "Holders") of the Notes (the "Consent Solicitation") to proposed amendments to the indenture governing the Notes (the "Indenture"), providing for, among other things, the elimination of substantially all of the restrictive covenants, various events of default and related provisions contained in the Indenture, as well as allowing the Company to replace itself as principal debtor in respect to the Notes by a substituted debtor; provided that the Company (and all other existing guarantors) shall guarantee the payment of all sums payable by the substituted debtor as such principal debtor on the same terms mutatis mutandis as the Notes and subject to certain other conditions (the "Proposed Amendments").The Tender Offer and the Consent Solicitation are being made upon the terms and subject to the conditions set forth in an offer to purchase and consent solicitation statement dated July 1, 2024 (the "Offer to Purchase and Consent Solicitation"). Any capitalized term used but not defined in this press release has the respective meaning set forth in the Offer to Purchase and Consent Solicitation.
The following table summarizes the material pricing terms of the Tender Offer.
Notes | CUSIP and ISIN | Principal | Tender Offer | Early Tender | Total |
| CUSIP: 861787 AA7 / G85158 AA4 ISIN: |
__________________ | |||
(1) | Per | ||
(2) | Payable only to Holders who validly tender Notes at or prior to the Early Tender Deadline (and do not validly withdraw their tender). Included in the Total Consideration. | ||
(3) | The Total Consideration equals the Tender Offer Consideration plus the Early Tender Consideration. | ||
The Tender Offer and the Consent Solicitation will expire immediately after 5:00 p.m.,
Payment for the Notes that are validly tendered and not validly withdrawn, along with Consents that are validly delivered and not validly revoked, prior to or at the Early Tender Deadline and that are accepted for purchase may be made, at our option, on the Early Settlement Date. The Early Settlement Date, if it occurs, is expected to be on two business days immediately after the Early Tender Deadline in respect of the Tender Offer and Consent Solicitation. It is anticipated that the Early Settlement Date, if it occurs, will be on or around July 17, 2024. If the Early Settlement Date occurs, payment for the Notes that are validly tendered and not validly withdrawn after the Early Tender Deadline and prior to or at the Expiration Time and that are accepted for purchase will be made on the Final Settlement Date. If no Early Settlement Date occurs, then payment for all the Notes that are validly tendered and not validly withdrawn at any time prior to the Expiration Time and that are accepted for purchase will be made on the Final Settlement Date. It is anticipated that the Final Settlement Date will be on or around July 31, 2024.
Notes tendered in accordance with the Tender Offer and Consent Solicitation may be withdrawn and Consents delivered may be revoked at any time at or prior to 5:00 p.m.,
The Company will pay a soliciting broker fee of
The consummation of the Tender Offer and the Consent Solicitation is subject to, and conditioned upon, the satisfaction or waiver of certain conditions described in the Offer to Purchase and Consent Solicitation.
If we receive the Requisite Consents (as defined in the Offer to Purchase and Consent Solicitation), as certified in writing by the Company to the Trustee (as defined in the Offer to Purchase and Consent Solicitation), and the other conditions to the Tender Offer and Consent Solicitation are satisfied or waived, it is expected that StoneCo Ltd., Stone Instituição de Pagamento S.A., MNLT S.A., and Pagar.me Instituição de Pagamento S.A. and the Trustee will execute a supplemental indenture (the "Supplemental Indenture"). The Supplemental Indenture will be effective promptly upon their execution and delivery; however, the Proposed Amendments will not become operative until amounts payable by us pursuant to the Tender Offer and Consent Solicitation are deposited with the Tender and Information Agent (as defined below) or, upon the Tender and Information Agent's instructions, with DTC, on the Final Settlement Date.
Notes tendered and Consents delivered at or prior to the Withdrawal Deadline may be withdrawn or revoked at any time at or prior to that Withdrawal Deadline, but not thereafter except as otherwise required by law. A valid withdrawal of tendered Notes will constitute the concurrent valid revocation of such Holder's related Consents and vice versa. In order for a Holder to revoke a Consent delivered together with the tender of the corresponding Notes, such Holder must withdraw the corresponding tendered Notes and in such case will receive no payment in connection with the Tender Offer and Consent Solicitation.
This press release does not constitute an offer to sell, or a solicitation of an offer to buy, any security. No offer, solicitation, or sale will be made in any jurisdiction in which such an offer, solicitation, or sale would be unlawful.
Banco Bradesco BBI S.A., HSBC Securities (
Copies of the Offer to Purchase and Consent Solicitation are available to Holders from D.F. King & Co., Inc., the tender agent and the information agent for the Tender Offer and the Consent Solicitation (the "Tender and Information Agent"). Requests for copies of the Offer to Purchase and Consent Solicitation should be directed to D.F. King at +1 (888) 644-6071 (toll-free), +1 (212) 269-5550 (collect) or stoneco@dfking.com.
Neither the Offer to Purchase and Consent Solicitation nor any related documents have been filed with the
Under no circumstances shall this press release constitute an offer to buy or the solicitation of an offer to sell the Notes or any other securities of the Company, the guarantors or any of their affiliates in
Any questions regarding the terms of the Tender Offer and Consent Solicitation should be directed to the Dealer Managers and Solicitation Agents at the addresses and telephone numbers set forth below.
The Dealer Managers for the Tender Offer and Solicitation Agents for the Consent Solicitation are:
Banco Bradesco BBI S.A. Av Presidente Juscelino Kubitschek, 1309, 10th floor São Paulo, SP, 04543-011 Attention: International Fixed Income Department Collect: +1 (646) 432-6642 | HSBC Securities ( 66 Hudson Boulevard Attention: Global Liability Management Group Toll Free: +1 (888) HSBC-4LM Collect: +1 (212) 525-5552
|
Jefferies LLC 520 Madison Avenue Attn: Debt Capital Markets Toll Free: +1 (888) 708-5831 Collect: +1 (203) 708-5831 | J.P. Morgan Securities LLC 383 Madison Avenue Attention: Latin America Debt Capital Markets Toll Free: +1 (866) 846-2874 Collect: +1 (212) 834-4533 |
Important Notice Regarding Forward-Looking Statements
This press release contains forward-looking statements. Forward-looking statements are information of a non-historical nature or that relate to future events and are subject to risks and uncertainties. No assurance can be given that the transactions described in this press release will be consummated or as to the ultimate terms of any such transactions. Neither the Company nor the guarantors undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events or for any other reason.
Disclaimer
This press release must be read in conjunction with the Offer to Purchase and Consent Solicitation. This press release and the Offer to Purchase and Consent Solicitation contain important information that must be read carefully before any decision is made with respect to the Tender Offer and the Consent Solicitation. If any Holder is in any doubt as to the action it should take, it is recommended to seek its own legal, tax, accounting and financial advice, including as to any tax consequences, from its attorney, accountant or other independent financial or legal adviser. None of the Company, the guarantors, the Dealer Managers and Solicitation Agents, the Tender and Information Agent or any affiliate of such persons expresses any opinion as to whether the terms of the Tender Offer are fair to any Holder. Holders must make their own decision as to whether to tender and deliver Consent with respect to any Notes and, if so, the principal amount of Notes to tender.
About Stone
Stone is a leading provider of financial technology and software solutions that empower merchants to conduct commerce seamlessly across multiple channels and help them grow their businesses.
Contact:
Investor Relations
investors@stone.co
View original content:https://www.prnewswire.com/news-releases/stoneco-ltd-announces-any-and-all-cash-tender-offer-and-consent-solicitation-302187398.html
SOURCE StoneCo Ltd.
FAQ
What is StoneCo's recent announcement about a tender offer?
When does the StoneCo tender offer expire?
What is the early tender consideration for StoneCo's tender offer?
What is the total consideration for StoneCo's tender offer?
What are the settlement dates for StoneCo's tender offer?
