ADT Inc (NYSE: ADT) issues $ 1 billion notes to buy back debt
ADT Inc (NYSE: ADT) announced that its indirect wholly-owned subsidiary, The ADT Security Corporation, would issue the $ 1 billion notes to repay its debt.
Lowering lever: ADT, through its indirect wholly-owned subsidiary (issuer of the Notes), would raise funds by issuing $ 1 billion of senior secured notes. The proceeds from the Notes would help the Company meet its short-term financial obligations. Moreover, it will also help the company to focus on its business activities and improve its profitability.
According to the company, the company will raise funds through QIP (Qualified Institutional Buyers or Placement) also from non-US investors. Senior Senior Covered Bonds have a coupon rate of 4.125%, maturing in 2029.
Exchange Short Term Notes: The proceeds received from the issuance of the Senior Senior Notes will be used to repurchase or repay $ 1,000 million of debt, with a coupon rate of 3.5% maturing in 2022. The Company will use the proceeds for the payment of note issuance costs and other expenses. The Notes are expected to increase debt, which could increase its financial obligations as interest expense is expected to increase. As a result, this will have an impact on profitability. However, in the short term, the measures taken by ADT will allow it to buy back tickets. In addition, it will reduce the short-term burden in terms of debt payment.
According to the company’s statement, ADT’s long-term debt at the end of the first quarter of 2021 stood at $ 9,446 million or $ 9.45 billion. The company in the first quarter raised a total of $ 11 million in long-term debt in the first quarter. In contrast, repayments on long-term loans, including premiums, amounted to $ 18 million. Given the leverage on the book, which should hurt profitability, investors are somewhat aware of the stock’s performance.