Gen Announces Pricing of $950,000,000 of Senior Notes

Rhea-AI Summary

Gen Digital (NASDAQ: GEN) has announced the pricing of $950 million in senior notes with a 6.25% interest rate, due in 2033. The private offering, scheduled to close on February 13, 2025, is exempt from Securities Act registration requirements. The company plans to use the proceeds, along with available cash, to repurchase all outstanding 5.00% Senior Notes due 2025.

The notes are exclusively offered to qualified institutional buyers under Rule 144A and non-U.S. investors under Regulation S. They will not be registered under the Securities Act or state securities laws, limiting their sale and offer within the United States to qualified exemptions.

Positive

• Successful pricing of $950M senior notes offering
• Strategic refinancing of existing debt obligations
• Extended debt maturity from 2025 to 2033

Negative

• Higher interest rate on new notes (6.25%) compared to existing notes (5.00%)
• Increased interest expense will affect future cash flows

Insights

Fixed Income Analyst

Gen Digital's $950M senior notes offering represents a significant debt restructuring that merits careful analysis. The new 6.25% notes due 2033 will replace the existing 5.00% notes due 2025, resulting in an annual interest expense increase of approximately $11.9M (125 basis points on $950M). While this higher rate reflects the current interest rate environment, the company is making a strategic decision to extend its debt maturity by eight years, from 2025 to 2033.

The timing of this refinancing is particularly noteworthy. Rather than waiting until closer to the 2025 maturity date, Gen Digital is proactively managing its debt structure. This early refinancing, despite the higher rate, suggests management's desire to eliminate near-term refinancing risk and lock in rates before any potential market volatility. The extension of maturity provides enhanced financial flexibility and reduces refinancing risk during a period when interest rates remain elevated.

From a balance sheet perspective, this transaction is leverage-neutral as it's essentially replacing existing debt. However, the increased interest expense will have a modest impact on free cash flow. For a company with a market cap of $17.2B, the additional $11.9M in annual interest expense represents approximately 0.07% of market value, a manageable increase that shouldn't materially impact the company's financial flexibility.

The private placement nature of the offering, restricted to qualified institutional buyers, typically allows for more efficient execution and potentially more favorable terms compared to a public offering. The strong interest from institutional investors, despite the higher rate, indicates confidence in Gen Digital's credit profile and long-term business prospects.

TEMPE, Ariz. and PRAGUE, Feb. 13, 2025 /PRNewswire/ -- Gen Digital Inc. (NASDAQ: GEN), a global leader dedicated to powering Digital Freedom through its family of consumer brands, announced today that it has priced $950 million aggregate principal amount of its 6.25% senior notes due 2033 (the "Notes"), which were offered in a private offering (the "Notes Offering") that is exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act").

The offering of the Notes is expected to close on February 13, 2025, subject to customary closing conditions. We intend to use the net proceeds of this Notes Offering, together with cash on hand, to repurchase all of our outstanding 5.00% Senior Notes due 2025 (the "2025 Notes") and pay accrued and unpaid interest thereon.

The Notes are being offered only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act, and outside the United States, only to non-U.S. investors pursuant to Regulation S. The Notes will not be registered under the Securities Act or the securities laws of any state and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful. This press release also shall not constitute an offer to purchase, a solicitation of an offer to sell, or notice of redemption with respect to the 2025 Notes. This press release is being issued pursuant to and in accordance with Rule 135c under the Securities Act.

About Gen

Gen™ (NASDAQ: GEN) is a global company dedicated to powering Digital Freedom through its trusted Cyber Safety brands, Norton, Avast, LifeLock, Avira, AVG, ReputationDefender and CCleaner. The Gen family of consumer brands is rooted in providing safety for the first digital generations. Now, Gen empowers people to live their digital lives safely, privately, and confidently today and for generations to come. Gen brings award-winning products and services in cybersecurity, online privacy and identity protection to nearly 500 million users in more than 150 countries. Learn more at GenDigital.com. 

Cautionary Statement Concerning Forward-Looking Statements

This press release contains forward-looking statements, which are subject to safe harbors under the Exchange Act of 1934, as amended. Forward-looking statements include statements that represent our expectations or beliefs concerning future events, including, without limitation, references to our ability to utilize our deferred tax assets, as well as statements including words such as "expects," "plans," "anticipates," "believes," "estimates," "predicts," "goal," "intent," "momentum," "projects," "forecast," "outlook," "strategy," "future," "opportunity," "plan," "may," "should," "will," "would," "will be," and similar expressions. In addition, projections of our future financial performance, anticipated growth and trends in our businesses and in our industries, the consummation of or anticipated impacts of acquisitions, divestitures, restructurings, stock repurchases, financings, debt repayments and investment activities, the outcome or impact of pending litigation, claims or disputes, our intent to pay quarterly cash dividends in the future, plans for and anticipated benefits of our products and solutions, anticipated tax rates, benefits and expenses, the impact of inflation, fluctuations in foreign currency exchange rates, changes in interest rates, ongoing and new geopolitical conflicts, and other global macroeconomic factors on our operations and financial performance, the expected impact of our new strategy and other characterizations of future events or circumstances are forward-looking statements. These statements are only predictions, based on our current expectations about future events and may not prove to be accurate. We do not undertake any obligation to update these forward-looking statements to reflect events occurring or circumstances arising after the date of this press release.

Investor Relations & Media Contact

Jason Starr
Gen
IR@GenDigital.com

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SOURCE Gen Digital Inc.

FAQ

What is the interest rate and maturity of Gen Digital's new senior notes offering?

Gen Digital's new senior notes offering has a 6.25% interest rate and matures in 2033.

How much is Gen Digital's (GEN) new senior notes offering worth?

Gen Digital's new senior notes offering is worth $950 million in aggregate principal amount.

What will Gen Digital (GEN) use the proceeds from the 2033 notes for?

Gen Digital will use the proceeds, along with cash on hand, to repurchase all outstanding 5.00% Senior Notes due 2025.

Who is eligible to purchase Gen Digital's (GEN) new senior notes?

The notes are only available to qualified institutional buyers under Rule 144A and non-U.S. investors under Regulation S.

When is the closing date for Gen Digital's (GEN) $950M notes offering?

The notes offering is expected to close on February 13, 2025, subject to customary closing conditions.