AUBURN HILLS, Mich. - BorgWarner Inc. (NYSE: NYSE:BWA), a global product leader in clean and efficient technology solutions for combustion, hybrid and electric vehicles, announced today the initiation of cash tender offers for two series of its outstanding debt securities. The offers pertain to the company's 3.375% Senior Notes due 2025 and 5.000% Senior Notes due 2025.
The tender offers are being made to purchase any and all of the outstanding notes, with the total principal amounts outstanding being $384,474,000 for the 3.375% notes and $453,187,000 for the 5.000% notes. BorgWarner has stated that the terms and conditions of these offers are detailed in the Offer to Purchase and the related Notice of Guaranteed Delivery, documents designed to guide the holders of these securities.
Investors who validly tender their notes before the expiration time, which is set for 5:00 p.m., New York City time, on August 13, 2024, will be eligible to receive the tender offer consideration.
This consideration will be determined by reference to a fixed spread over the applicable U.S. Treasury Reference Security, with a maximum payout of $1,000 per $1,000 principal amount for the 3.375% notes and $1,010 per $1,000 principal amount for the 5.000% notes. Moreover, holders will receive accrued and unpaid interest up to, but not including, the expected settlement date of August 16, 2024.
The company's obligation to accept for purchase, and to pay for, the notes is contingent upon the satisfaction or waiver of certain conditions outlined in the Offer to Purchase, but is not subject to a minimum tender condition. BorgWarner has engaged BofA Securities, Inc., Citigroup Global Markets Inc., and Wells Fargo (NYSE:WFC) Securities, LLC as the dealer managers for the tender offers.
This press release is issued in accordance with legal requirements and is not an offer to sell or a solicitation for an offer to buy securities. The tender offers are only being made pursuant to the Tender Offer Documents, and only in locations where it is legally permissible.
BorgWarner, with a history spanning over 130 years, has been at the forefront of introducing mobility innovations. The company emphasizes that its current focus is on accelerating the transition to eMobility to contribute to a cleaner and more sustainable future. The information in this article is based on a press release statement.
In other recent news, BorgWarner Inc. has reported strong Q2 financial results, with sales reaching $3.6 billion despite a slight decline in production. The company announced major restructuring within its ePropulsion segment, aiming for annual cost savings of around $100 million by 2026. Notably, BorgWarner has increased its full-year margin outlook, even with reduced total sales projections for 2024.
The company also detailed plans to repurchase $300 million of its stock in the latter half of the year, demonstrating a commitment to shareholder returns. Moreover, BorgWarner secured new product awards across combustion, hybrid, and electric vehicles, indicating a strategic focus on these sectors. Despite weaker foreign currencies and a lower market production outlook, the company's restructuring actions are expected to offset sales declines and provide significant cost savings.
These recent developments highlight BorgWarner's resilience in the face of market challenges, with a clear emphasis on growth in the hybrid and electric vehicle sectors. The company's strategic focus on shareholder returns, as demonstrated by the stock repurchase plan, reflects a confident outlook.
InvestingPro Insights
BorgWarner Inc. (NYSE: BWA) has recently made a strategic move with the initiation of cash tender offers for two series of its outstanding debt securities, which could potentially impact its financial leverage and interest expenses. In light of this, certain metrics and InvestingPro Tips can provide investors with a deeper understanding of the company’s financial health and market expectations.
InvestingPro data shows that BorgWarner has a market capitalization of $7.37 billion and a Price to Earnings (P/E) ratio of 10.28, which suggests that the company is valued at a level that is relatively attractive compared to its earnings. The adjusted P/E ratio for the last twelve months as of Q2 2024 stands at 7.94, further indicating a potentially undervalued stock. Moreover, the company's revenue growth over the last twelve months was 5.48%, demonstrating a stable increase in sales.
One of the InvestingPro Tips highlights the company's strong shareholder yield, which is an encouraging sign for investors looking for returns through dividends and share repurchases. Moreover, BorgWarner has maintained dividend payments for 12 consecutive years, reinforcing its commitment to returning value to its shareholders.
However, it is important to note that 12 analysts have revised their earnings downwards for the upcoming period, which may suggest that there are some challenges ahead. Despite this, BorgWarner’s gross profit margins, although considered weak at 18.41%, are supported by the fact that its cash flows can sufficiently cover interest payments, a significant aspect especially when considering the company's current debt tender offers.
For investors seeking more in-depth analysis, there are additional InvestingPro Tips available on https://www.investing.com/pro/BWA, which could provide further insights into BorgWarner's financial position and future prospects.
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