MIDDLETON, Wis. - Spectrum Brands Holdings, Inc. (NYSE: NYSE:SPB), a global consumer products company, has declared its intention to issue $300 million in exchangeable senior notes due 2029 through its subsidiary, Spectrum Brands, Inc. This announcement coincides with a new share repurchase plan, according to a statement released today.
The company plans to allocate the net proceeds from the notes for several purposes. These include funding capped call transactions, repurchasing up to $100 million of its common stock, and covering general corporate expenses. If the initial offering is oversubscribed, Spectrum Brands may grant an option to purchase up to an additional $50 million in notes, with the proceeds further supporting capped call transactions and general corporate needs.
The exchangeable notes, bearing interest payable semi-annually, will mature on June 1, 2029, unless earlier repurchased, redeemed, or exchanged. They will be exchangeable under certain conditions and periods before March 1, 2029, and anytime thereafter until two days before maturity.
At exchange, the company may pay cash up to the principal amount and deliver cash, shares, or a combination thereof for the remaining value. These notes will be guaranteed by Spectrum Brands Holdings and certain domestic subsidiaries.
Holders of the notes will have the right to demand the company repurchase their notes at full principal value plus any accrued interest in the event of specific corporate changes. The company may not redeem the notes before June 7, 2027, but may choose to do so thereafter under specific conditions.
In line with the pricing of the exchangeable notes, Spectrum Brands anticipates entering into capped call transactions to minimize potential dilution or cash payment obligations upon the exchange of the notes. However, if the market price of the common stock exceeds the cap price, dilution or cash payment obligations may not be fully offset.
Additionally, the company's Board of Directors has authorized a new $500 million common stock repurchase program, effective immediately and supplanting the previous program. Up to $100 million of this authorization may be used in conjunction with the exchangeable notes offering.
This news is based on a press release statement.
InvestingPro Insights
Spectrum Brands Holdings, Inc. (NYSE: SPB) is navigating a complex financial landscape, as reflected in the recent data and analysis from InvestingPro. With a market capitalization of $2.68 billion and a challenging revenue growth rate of -4.09% over the last twelve months as of Q2 2024, the company's financial position is under scrutiny. Despite this, the gross profit margin remains strong at 35.5%, indicating a solid core operational efficiency.
Investors should note the company's P/E ratio, which stands at a strikingly low 1.65, suggesting the market may undervalue the earnings potential of Spectrum Brands. However, the adjusted P/E ratio for the same period tells a different story, at -49.91, reflecting the complexities in the company's earnings landscape.
On the positive side, InvestingPro Tips highlight that Spectrum Brands has liquid assets that exceed its short-term obligations, suggesting the company is well-positioned to manage its immediate financial responsibilities. Additionally, with a moderate level of debt, the company maintains a balance between leveraging opportunities for growth and maintaining financial stability.
InvestingPro also notes that the company is expected to be profitable this year, which may reassure investors considering the exchangeable senior notes issuance and the new share repurchase plan. This optimism is further bolstered by a strong return over the last month, with a 14.55% total return, and a significant 40.74% price uptick over the last six months, reflecting investor confidence.
For those interested in a deeper analysis, there are additional InvestingPro Tips available that could provide further insights into Spectrum Brands' financial health and future prospects. By using the coupon code PRONEWS24, readers can get an extra 10% off a yearly or biyearly Pro and Pro+ subscription to access these valuable tips and make more informed investment decisions.
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