Honeywell has announced the launch of an offering of senior notes by its aerospace division as part of the planned spin-off of Honeywell Aerospace Inc. from the company. The offering amounts to up to $16 billion in aggregate principal amount of senior notes, with the precise size, timing, and terms subject to market conditions and other factors.
In connection with the planned spin-off, Honeywell Aerospace has also entered into a five-year senior unsecured revolving credit facility in an aggregate committed amount of $3 billion and a 364-day senior unsecured revolving facility in an aggregate committed amount of $1 billion.
The proceeds from the offering of certain series of the notes, referred to as the "new money notes," are intended to be used to make a cash distribution to Honeywell prior to and in contemplation of the spin-off, as well as to pay fees and expenses related to the spin-off, the revolving credit facilities, and the notes offering, or for general corporate purposes.
Another series of the notes, the "exchange notes," will initially be issued by aerospace to Honeywell and are expected to be transferred and delivered by Honeywell to specific selling noteholders in satisfaction of certain debt obligations under a credit facility previously entered into by Honeywell with affiliates of the selling noteholders. Aerospace will not receive any cash proceeds from the offering of the exchange notes.
The notes will be senior unsecured obligations of aerospace and guaranteed on an unsecured senior basis by Honeywell until the spin-off is completed. Upon the consummation of the spin-off, Honeywell will be automatically and unconditionally released from all obligations under its guarantees without any action taken by the holders of the notes.
The offering of the notes is not contingent on the completion of the spin-off. The notes and related guarantees have not been registered under the Securities Act of 1933 and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except in transactions exempt from, or not subject to, the registration requirements of the Securities Act.
Honeywell Aerospace Inc. is described as a leading global tier-1 aerospace and defense supplier of mission-critical systems and technologies that enable the production, maintenance, and safe operation of aerospace and defense platforms. Its systems and technologies support various customers across the commercial air transport, defense and space, and business aviation end markets.
Honeywell, on the other hand, is an integrated operating company serving a broad range of industries and geographies around the world, with a portfolio underpinned by the Honeywell Accelerator Operating System and Honeywell Forge platform. The company aims to provide actionable solutions and innovations for aerospace, building automation, industrial automation, process automation, and process technology to help make the world smarter, safer, and more sustainable. The market has reacted to these announcements by moving the company's shares 2.03% to a price of $219.39. If you want to know more, read the company's complete 8-K report here.
