XP INC. ANNOUNCES TENDER RESULTS AND EXPIRATION TIME 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, a tech-driven financial services platform in Brazil, announced the results and expiration of its cash tender offer for US$736.4 million of 3.250% Senior Unsecured Notes due 2026. The tender offer expired on June 26, 2024, with $303.67 million worth of notes tendered. The purchase price is $946 per $1,000 principal amount of notes, plus accrued interest. Settlement is expected by July 2, 2024. XP also launched a new notes offering to secure funds for the purchase. The tender offer's completion is conditional upon successful financing.

Positive

• XP successfully tendered $303.67 million of its outstanding notes, reducing debt liabilities.
• The purchase price of $946 per $1,000 principal amount plus accrued interest provides a clear financial benefit to noteholders.

Negative

• The tender offer's completion is contingent on the successful issue of new notes, adding uncertainty.
• There is no assurance that the Financing Transaction will be completed successfully.

Insights

Financial Analyst

XP Inc.'s announcement of the tender results for their 3.250% Senior Unsecured Notes Due 2026 brings several important implications for investors. First and foremost, the fact that U.S.$303,673,000 in aggregate principal amount of the notes have been validly tendered and not withdrawn indicates a strong response from noteholders, which suggests a high level of confidence in XP’s financial management. This move helps XP to reduce its existing debt burden and potentially improve its debt-to-equity ratio, which could positively impact its credit ratings. In terms of implications, this debt reduction could lead to lower interest expenses in future periods, thereby potentially increasing net profitability.

However, it’s also critical to note that the tender offer is contingent upon the successful completion of a concurrent financing transaction. This financing transaction involves issuing new notes to fund the repurchase of the tendered notes. Investors should be cognizant that reliance on new financing introduces an element of risk, particularly in volatile market conditions where securing favorable terms for new debt might be challenging.

The net effect on the company's financial health hinges on the terms of the new debt issued. If the new notes carry a higher interest rate than the repurchased notes, XP might not gain as much benefit from the transaction as anticipated. Conversely, if the new notes are issued at a lower rate or with better terms, XP stands to save on interest payments, enhancing its financial performance.

Market Research Analyst

The tender offer and subsequent refinancing strategy can be seen as a proactive move by XP Inc. to manage its debt profile strategically. In the broader market context, such actions often signal to investors that the company is taking steps to optimize its capital structure, potentially enhancing investor confidence. The participation level of 41.23% (calculated as U.S.$303,673,000 tendered out of U.S.$736,435,000 outstanding) reflects a significant engagement from bondholders, which is a positive indicator of their willingness to accept XP’s terms.

From a market perspective, this transaction could also impact XP’s stock price. The announcement might be perceived as a sign of financial discipline, potentially leading to positive sentiment among equity investors. However, the uncertainty surrounding the successful completion of the new note issuance could introduce short-term volatility. It’s essential for investors to monitor upcoming announcements regarding the new financing to gauge the full impact.

Furthermore, XP's approach of covering the Purchase Price and Accrued Interest after withholding tax underscores their commitment to maintaining good relations with their investors, which can enhance their reputation in the capital markets.

ANNOUNCEMENT TO THE MARKET

SÃO PAULO, June 27, 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 tender results and expiration time of its 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").

As previously announced, the expiration time for the Tender Offer was 5:00 p.m., New York City time, on June 26, 2024 (such date and time, the "Expiration Time"). As of the Expiration Time, U.S.$303,673,000 in aggregate principal amount of the Notes outstanding had been validly tendered and not withdrawn pursuant to the Tender Offer. Settlement of the Tender Offer is expected to occur on or about July 2, 2024 (the "Settlement Date").

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

Notes		CUSIP and ISIN Number(s)		Principal Amount Outstanding		Purchase Price(1)(2)
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).
(2)	Subject to satisfaction of the terms and conditions described in the Offer to Purchase, including, without limitation, the Financing Condition.

Upon the terms and subject to the conditions of the Tender Offer set forth in the Offer Documents, all Notes validly tendered and not validly withdrawn at or prior to the Expiration Time have been accepted for purchase and will be paid in full by XP on the Settlement Date and all Holders who validly tendered and did not validly withdraw their Notes at any time at or prior to the Expiration Time will receive the Purchase Price (as defined in the Offer to Purchase) plus Accrued Interest.

Additionally, we will pay additional amounts such that the Purchase Price and the 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 announced 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		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 are the results of XP's cash tender offer for 3.250% Senior Unsecured Notes due 2026?

XP tendered $303.67 million of the total $736.4 million in outstanding notes by the June 26, 2024 expiration.

What is the purchase price for XP's tendered notes?

XP is offering $946 per $1,000 principal amount, plus accrued interest.

When is the settlement date for XP's tender offer?

Settlement is expected to occur around July 2, 2024.

What is the condition for XP's tender offer completion?

The tender offer completion is contingent upon the successful financing transaction to fund the purchase price.