Item 1.01 Entry into a Material Definitive Agreement.
Senior Notes Offering
Issuance of 4.000% Senior Notes due 2029
On August 26, 2021, Resideo Funding Inc. (the “Issuer”), a wholly-owned subsidiary of Resideo Technologies, Inc. (the “Company”), successfully completed the previously announced offering of $300 million aggregate principal amount of the Issuer’s 4.000% Senior Notes due 2029 (the “Notes”). The Notes and related guarantees were offered to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), and to certain non-U.S. persons in transactions outside of the United States in reliance on Regulation S under the Securities Act. The Notes and related guarantees will not be registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The Notes were issued pursuant to an Indenture, dated August 26, 2021 (the “Indenture”), among the Issuer, the Company, the other Guarantors (as defined below) named therein, and U.S. Bank National Association, as trustee (the “Trustee”).
The net proceeds from the sale of the Notes were used to fund the redemption of the Issuer’s existing 6.125% Senior Notes due 2026 (the “2026 Notes”) and to pay fees and expenses related to the offering of the Notes and the redemption of the 2026 Notes. The remaining net proceeds are expected to be used for general corporate purposes.
Notes Guarantees
The Notes are senior unsecured obligations of the Issuer and are guaranteed on an unsecured senior basis by the Company and each of the Company’s existing and future domestic subsidiaries that guarantee the Company’s senior secured credit facilities and certain future domestic subsidiaries that incur indebtedness in excess of $50.0 million (collectively, the “Guarantors”).
Maturity and Interest Payments
The Notes mature on September 1, 2029. Interest on the Notes accrues at 4.000% per annum and will be paid semi-annually, in arrears, on September 1 and March 1 of each year, commencing March 1, 2022.
Optional Redemption
Prior to September 1, 2024, the Issuer may, at its option, redeem the Notes, in whole or in part, at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, plus the applicable “make-whole” premium set forth in the Indenture. The Issuer may redeem the Notes, in whole or in part, at any time on or after September 1, 2024 at the redemption prices set forth in the Indenture. The Issuer may, at its option, also redeem up to 40% of the aggregate principal amount of the Notes prior to September 1, 2024 in an amount equal to the net proceeds from certain equity offerings at the redemption price equal to 104.000% of the principal amount thereof plus accrued and unpaid interest, if any.
Certain Covenants
The Indenture limits the Company and its restricted subsidiaries’ ability to, among other things, incur additional non-Guarantor indebtedness and issue non-Guarantor preferred stock; enter into certain sale and leaseback transactions; incur liens; and consolidate, merge or sell all or substantially all of their assets. These covenants are subject to a number of limitations and exceptions.
Additionally, upon certain events constituting a change of control together with a ratings downgrade, the holders of the Notes have the right to require the Issuer to offer to repurchase the Notes at a purchase price equal to 101% of their principal amount, plus accrued and unpaid interest, to (but not including) the date of purchase.
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