Honeywell announced on March 10 the pricing of a private offering of senior notes by Honeywell Aerospace Inc. in connection with its previously announced plan to spin off the aerospace business from Honeywell.
The announcement is significant as it outlines the financial steps being taken to support the separation of Honeywell Aerospace, a major supplier in the aerospace and defense sector, from its parent company. The move is expected to impact both companies’ capital structures and future operations.
According to Honeywell, Aerospace has priced several tranches of senior notes totaling $15.5 billion, including new money notes and exchange notes with maturities ranging from 2028 to 2066. The proceeds from the new money notes will be used for a cash distribution to Honeywell ahead of the spin-off, as well as for fees, expenses related to the transaction, revolving credit facilities, and general corporate purposes. The exchange notes will be issued initially to Honeywell and then transferred to certain financial institutions in satisfaction of existing debt obligations under a previous credit facility. Aerospace will not receive any cash proceeds from this portion of the offering.
The company said that these senior unsecured obligations will be guaranteed by Honeywell until completion of the spin-off. Afterward, Honeywell’s guarantees will be automatically released without further action required by noteholders. The closing of this offering is expected around March 16, subject to customary conditions, but is not contingent on completion of the spin-off itself.
Honeywell stated that these securities are being offered only through private placements and are not registered under U.S. securities laws. They are available only to qualified institutional buyers or non-U.S. persons under specific regulations.
Honeywell Aerospace Inc., described as a leading global tier-1 supplier for mission critical systems in aerospace and defense markets, serves original equipment manufacturers, government agencies, defense contractors, and aircraft operators across commercial air transport, defense and space, and business aviation segments.
In its forward-looking statements section, Honeywell cautioned that actual results may differ significantly due to various risks such as changes in economic conditions or failure to complete or benefit from the proposed spin-off.
