XP INC. ANNOUNCES COMMENCEMENT OF CASH TENDER OFFER FOR ANY AND ALL OF THE OUTSTANDING U.S.$736,435,000 AGGREGATE PRINCIPAL AMOUNT OF 3.250% SENIOR UNSECURED NOTES DUE 2026 (CUSIP NOS. 98379X AA2/G98239 AA7)

Rhea-AI Summary

XP Inc. (Nasdaq: XP), a leading financial services platform in Brazil, announced the commencement of a cash tender offer for its outstanding 3.250% Senior Unsecured Notes due 2026, with a total principal amount of $736,435,000. The offer, expiring on June 26, 2024, allows noteholders to tender their notes for a purchase price of $946 per $1,000 principal amount plus accrued interest. The tender offer is contingent on a concurrent financing transaction involving new notes issued by XP, the proceeds of which will partially fund the purchase of tendered notes. Noteholders must meet specified conditions to participate, and the offer may be amended or terminated at XP's discretion.

For more details, visit XP Inc. Cash Tender Offer

Positive

• XP Inc. offers $946 per $1,000 principal amount for its 3.250% Senior Unsecured Notes due 2026.
• Proceeds from a new note issuance will partially fund the tender offer.
• Tender offer provides liquidity option for noteholders.

Negative

• The tender offer is contingent on the successful completion of a new financing transaction.
• The tender offer can be amended or terminated at XP’s discretion.
• Potential risk if the financing transaction does not yield sufficient proceeds.

Financial Analyst

XP Inc.'s commencement of a cash tender offer for its outstanding 3.250% Senior Unsecured Notes due 2026 is a significant move. The offer to purchase these notes at USD 946 per USD 1,000 principal amount indicates XP's intent to optimize its debt structure amidst current market conditions. This could be viewed positively as it may lead to a better balance sheet, reducing future interest expenses and enhancing financial flexibility.

The company's concurrent announcement of a new notes offering to fund the tender offer adds an element of risk. The success of the tender offer is contingent upon this new financing, which isn't guaranteed. Investors should monitor the market's reception to these new notes closely.

Short-term, this tender offer might inject some volatility into XP's stock as the market digests the implications of this financial maneuver. Long-term, assuming the new notes are well-received and executed successfully, it could position XP for improved financial stability and reduced interest obligations.

This strategy aligns with industry norms where companies refinance to take advantage of better rates or to manage debt maturities more effectively. However, the dependency on the new financing adds an element of uncertainty investors should be aware of.

Fixed Income Expert

The initiative to repurchase Senior Unsecured Notes with a purchase price below their face value can be seen as a strategic effort to capitalize on current market conditions. For noteholders, this tender offer provides an opportunity to liquidate their holdings at a premium to the current market price, but below par value, which could be attractive depending on their liquidity needs and market outlook.

The offered USD 946 per USD 1,000 principal amount suggests XP Inc. is managing its liabilities proactively. Yet, this comes with a trade-off as the new debt issuance's success is pivotal. Should the new notes issuance face challenges, it might leave XP with unresolved financial strategies and potential impacts on their creditworthiness.

The industry's response to this maneuver will be crucial. Ensuring favorable terms in the new notes (interest rates, maturities) will determine the overall success of this financial strategy. It's a common practice but requires precise execution.

XP Inc. ANNOUNCEMENT TO THE MARKET

SÃO PAULO, June 20, 2024 /PRNewswire/ -- XP Inc. ("XP" or "we") (Nasdaq: XP), a leading, technology-driven platform and a trusted provider of low-fee financial products and services in Brazil, announced today the commencement of an offer to purchase for cash any and all of its outstanding 3.250% Senior Unsecured Notes Due 2026 (the "Notes"), for a purchase price set forth in the table below (the "Tender Offer"). The Tender Offer is being made upon the terms and subject to the conditions (including the Financing Condition (as defined in the Offer to Purchase)) set forth in the offer to purchase dated June 20, 2024 (the "Offer to Purchase") and the related notice of guaranteed delivery (the "Notice of Guaranteed Delivery" and, together with the Offer to Purchase, the "Offer Documents").

The table below summarizes certain information relating to the Tender Offer:

Notes		CUSIP and ISIN Number(s)		Principal Amount Outstanding		Purchase Price(1)
3.250% Senior Unsecured Notes due 2026		CUSIP: 98379X AA2/G98239 AA7 ISIN: US98379XAA28/USG98239AA72		U.S.$736,435,000		U.S.$946.00

(1)	The amount to be paid per each U.S.$1,000.00 principal amount of applicable Notes, validly tendered and accepted for purchase (and not validly withdrawn), plus Accrued Interest (as defined in the Offer to Purchase).

The Tender Offer will expire at 5:00 p.m., New York City time, on June 26, 2024, unless extended or terminated by us in our sole discretion (such date and time, as it may be extended with respect to the Tender Offer, the "Expiration Time"). Holders of Notes must (1) validly tender (and not validly withdraw) their Notes at or prior to the Expiration Time or (2) deliver a properly completed and duly executed Notice of Guaranteed Delivery and other required documents pursuant to the Guaranteed Delivery Procedures (as defined in the Offer to Purchase) at or prior to the Expiration Time and validly tender their Notes at or prior to the Guaranteed Delivery Expiration Time (as defined in the Offer to Purchase) in order to be eligible to receive the Purchase Price (as defined in the Offer to Purchase) plus Accrued Interest (as defined in the Offer to Purchase) for such Notes. Tendered Notes may be validly withdrawn at any time at or prior to the Withdrawal Deadline (as defined in the Offer to Purchase) but not thereafter, except in certain limited circumstances where additional withdrawal rights are required by law.  

Additionally, we will pay additional amounts such that the applicable Purchase Price and the applicable Accrued Interest received by Holders after withholding tax, if any, will be equal to the amount that would have been due had there been no withholding tax, subject to the same exceptions as are included in the indenture.

Concurrently with the commencement of the Tender Offer, we are announcing an offering (the "Financing Transaction") of new notes (the "New Notes") to be issued by XP in reliance on an exemption from the registration requirements of the U.S. Securities Act of 1933, as amended. 

We expect to use part of the net proceeds from the Financing Transaction to pay the Purchase Price and Accrued Interest on the Notes validly tendered and accepted by us in the Tender Offer. XP's obligation to purchase Notes in the Tender Offer is subject to and conditioned upon the satisfaction or waiver of certain conditions described in the Offer to Purchase, including the condition that we shall have successfully consummated the Financing Transaction and shall have received net cash proceeds from the Financing Transaction in an amount sufficient (as determined by XP in its sole and absolute discretion) to fund the Purchase Price with respect to the Notes validly tendered at or prior to the Expiration Date, plus Accrued Interest, as well as any related fees and expenses relating to the Tender Offer and the Financing Transaction. No assurance can be given that the Financing Transaction will be completed successfully. This announcement and the information contained in this announcement regarding the New Notes do not constitute an offer to sell or a solicitation of an offer to buy any New Notes.  XP reserves the right, in XP's sole discretion, to amend or terminate the Tender Offer at any time.

Neither the Offer Documents nor any related documents have been filed with, approved or reviewed by any federal or state securities commission or regulatory authority of any country. No authority has passed upon the accuracy or adequacy of the Offer Documents or any related documents, and it is unlawful and may be a criminal offense to make any representation to the contrary.

The information and tender agent for the Tender Offer is D.F. King & Co., Inc. To contact the information and tender agent, banks and brokers may call +1 (212) 269-5550, and others may call U.S. toll-free: +1 (814-2879 or email xp@dfking.com.

Copies of each of the Offer Documents are available at the following web address: www.dfking.com/xp.

Any questions or requests for assistance or for additional copies of this notice may be directed to the dealer managers at their respective telephone numbers set forth below or, if by any Holder, to such Holder's broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Tender Offer.

The dealer managers for the Tender Offer are:

XP Investimentos Corretora de Câmbio, Títulos e Valores Mobiliários S.A. Av. Presidente Juscelino Kubitschek, 1.909, 30th Floor Torre Sul - Vila Olímpia, São Paulo, SP 04543-010 Brazil Attn: International Fixed Income E-mail: dcm@xpi.com.br with copy to juridicomc@xpi.com.br	BofA Securities, Inc. One Bryant Park New York, New York 10019 Attention: Liability Management Group Telephone (U.S. Toll Free): +1 (888) 292 0070 Telephone (U.S.): +1 (646) 855 8988
Banco Bradesco BBI S.A. Av Presidente Juscelino Kubitschek, n.º 1309, 10th floor São Paulo, SP, 04543-011 Brazil Attn: International Fixed Income Department Collect: +1 (646) 432-6642	Citigroup Global Markets Inc. 388 Greenwich Street, Trading 4th Floor New York, New York 10013 United States of America Attn: Liability Management Group Collect: +1 (212) 723-6106 Toll-Free: +1 (800) 558-3745
Goldman Sachs & Co. LLC 200 West Street New York, New York 10282 Collect: (212) 357-1452 Attn: Liability Management Group Toll-Free: (800) 828-3182	Itau BBA USA Securities, Inc. 540 Madison Avenue, 24th Floor New York, New York 10022 United States of America Attn: Debt Capital Markets Toll Free: +1 (888) 770-4828 Collect: +1 (212) 710-6749
J.P. Morgan Securities LLC 383 Madison Avenue New York, New York 10179 United States of America Attn: Latin America Debt Capital Markets Toll Free: +1 (866) 846-2874 Collect: +1 (212) 834-7279

This notice does not constitute or form part of any offer or invitation to purchase, or any solicitation of any offer to sell, the Notes or any other securities in the United States or any other country, nor shall it or any part of it, or the fact of its release, form the basis of, or be relied on or in connection with, any contract therefor. The Tender Offer is made only by and pursuant to the terms of the Offer Documents, and the information in this notice is qualified by reference to the Offer Documents. None of XP, the dealer managers or the information and tender agent makes any recommendation as to whether Holders should tender their Notes pursuant to the Tender Offer.

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SOURCE XP Inc.

FAQ

What is the XP Inc. cash tender offer for June 2024?

XP Inc. has initiated a cash tender offer for any and all of its outstanding 3.250% Senior Unsecured Notes due 2026, with a principal amount totaling $736,435,000.

When does the XP Inc. tender offer expire?

The XP Inc. tender offer expires at 5:00 p.m., New York City time, on June 26, 2024, unless extended or terminated by XP.

What is the purchase price XP Inc. is offering for its notes?

XP Inc. is offering a purchase price of $946 per $1,000 principal amount of the notes, plus accrued interest.

What conditions must be met for the XP Inc. tender offer?

The tender offer is conditional upon the successful completion of a financing transaction to issue new notes, and the receipt of sufficient net cash proceeds to fund the purchase of tendered notes.

How can noteholders participate in the XP Inc. tender offer?

Noteholders must validly tender their notes and deliver a properly completed Notice of Guaranteed Delivery by the expiration time to be eligible for the purchase price plus accrued interest.