Arrow Bidco, LLC Announces Redemption of Senior Secured Notes Due 2025

Rhea-AI Summary

Target Hospitality (NASDAQ: TH) subsidiary Arrow Bidco announced the redemption of all outstanding 10.75% senior secured notes due 2025, totaling $181.4 million. The redemption is scheduled for March 25, 2025, with noteholders receiving a redemption price of 101.000% of the principal amount plus accrued and unpaid interest.

Investors holding beneficial interests in the 2025 Notes should contact their bank or broker for information about obtaining the redemption payment.

Positive

• Early redemption of high-interest (10.75%) debt indicates strong cash position
• Debt reduction improves company's financial flexibility

Negative

• Premium payment of 1% above principal for early redemption adds to cost
• Significant cash outlay of over $181.4 million impacts liquidity

Insights

Financial Analyst

Target Hospitality's subsidiary Arrow Bidco's decision to redeem $181.4 million of 10.75% senior secured notes represents a significant deleveraging move for the company. This debt redemption - at 101% of principal plus accrued interest - will substantially reduce Target's interest expense burden going forward.

The financial significance becomes apparent when considering this redemption represents approximately 31% of Target Hospitality's current market capitalization of $582.8 million. By eliminating these high-yield notes that were set to mature in 2025, the company is proactively addressing its near-term debt obligations and potentially strengthening its balance sheet.

The ability to execute this full redemption suggests Target has either generated sufficient cash flow from operations, secured more favorable refinancing, or both. Given the relatively high 10.75% coupon rate on these notes, this redemption should create meaningful interest expense savings, which could directly enhance free cash flow and earnings in future quarters.

While the 1% redemption premium represents an immediate cash outlay of approximately $1.8 million above principal, the long-term financial benefits of removing this high-interest debt obligation likely outweigh this one-time cost. This transaction appears to be part of a broader liability management strategy that could improve Target's financial flexibility and potentially support shareholder value through improved capital allocation options.

THE WOODLANDS, Texas, March 10, 2025 /PRNewswire/ -- Arrow Bidco, LLC (the "Issuer"), a Delaware limited liability company and an indirect subsidiary of Target Hospitality Corp. ("Target Hospitality", "Target", or the "Company") (NASDAQ: TH), today announced that it issued a notice of redemption (the "Redemption") to redeem all $181.4 million in aggregate principal amount outstanding of its 10.75% senior secured notes due 2025 (the "2025 Notes") on March 25, 2025 (the "Redemption Date"). This announcement does not form part of or constitute a notice of redemption with respect to the 2025 Notes.

The 2025 Notes to be redeemed pursuant to the Redemption will be redeemed for a redemption price equal to 101.000% of the principal amount of the 2025 Notes redeemed plus accrued and unpaid interest to but not including the Redemption Date (the "Redemption Payment").

Investors in the 2025 Notes should contact the bank or broker through which they hold a beneficial interest in the 2025 Notes for information about obtaining the Redemption Payment for the 2025 Notes redeemed in which they have a beneficial interest.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements made in this release are "forward looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. When used in this press release, the words "estimates," "projected," "expects," "anticipates," "forecasts," "plans," "intends," "believes," "seeks," "may," "will," "should," "future," "propose" and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results, and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the Issuer's control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. More information about potential risks and uncertainties that could materially affect our business and results of operations is included in the "Risk Factors" and "Forward-Looking Statements" sections of Target Hospitality Corp.'s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, filed with the Securities and Exchange Commission ("SEC") on November 12, 2024 and Target Hospitality Corp.'s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on March 13, 2024, as well as other risks and uncertainties specified in the "Risk Factors" section of the Offering Memorandum. You should not place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them publicly or to revise them in light of new information, future events or otherwise, except as required by law.

About Target Hospitality

Target Hospitality is one of North America's largest providers of vertically integrated modular accommodations and value-added hospitality services in the United States. Target builds, owns and operates a customized and growing network of communities for a range of end users through a full suite of value-added solutions including premium food service management, concierge, laundry, logistics, security and recreational facilities services.

Investor Contact

Mark Schuck

(832) 702 – 8009

ir@targethospitality.com

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SOURCE Target Hospitality

FAQ

What is the total value of Target Hospitality's (TH) 2025 notes being redeemed?

Target Hospitality is redeeming $181.4 million in aggregate principal amount of its 10.75% senior secured notes due 2025.

When will Target Hospitality (TH) complete the redemption of its 2025 notes?

The redemption is scheduled for March 25, 2025.

What is the redemption price for Target Hospitality's (TH) 2025 notes?

The redemption price is 101.000% of the principal amount plus accrued and unpaid interest.

How can investors receive payment for their Target Hospitality (TH) 2025 notes?

Investors should contact their bank or broker through which they hold beneficial interest in the notes to obtain the redemption payment.