GATES ANNOUNCES INTENTION TO OFFER $500 MILLION OF SENIOR NOTES
Denver, May 22, 2024 — Gates Industrial (NYSE: GTES) announced its plan to offer $500 million in Senior Notes due 2029 through its subsidiary, Gates These notes will be guaranteed by Gates Industrial Holdco and certain other subsidiaries. The proceeds, in combination with new term loans and cash on hand, will be used to refinance existing debt. The notes are not registered under the Securities Act of 1933 and will be offered only to qualified institutional buyers and in transactions outside the U.S. under Regulation S. This announcement is not an offer or solicitation to sell or buy any securities.
- Offering of $500 million in Senior Notes indicates potential for significant capital influx.
- Notes guaranteed by Gates Industrial Holdco , adding a layer of security for investors.
- Proceeds will be used to refinance existing debt, potentially improving financial health.
- Targeting qualified institutional buyers and international investors might bring in financially stable investors.
- Notes are not registered under the Securities Act of 1933, limiting some investor participation.
- Reliance on exemptions may raise regulatory scrutiny or legal complexities.
- Refinancing indicates existing indebtedness, which could signal underlying financial stress.
The announcement of Gates Industrial Corporation to offer
The guarantee by Gates Industrial Holdco Limited and other subsidiaries provides an additional layer of security for investors, indicating the company's commitment to honoring this debt. This can make the notes more attractive to investors seeking higher priority in case of a bankruptcy scenario.
However, issuing debt also implies increased leverage. While this can amplify returns in good times, it can also pose risks if the company's earnings aren't sufficient to cover interest payments. Therefore, investors should assess Gates' current debt levels, interest coverage ratios and overall financial stability before making any decisions.
Additionally, the fact that the notes aren't registered under the Securities Act and will be offered only to qualified institutional buyers means retail investors won't have direct access to these securities. This move aligns with Rule 144A and Regulation S, which are designed to facilitate sales of securities to institutions without the need for SEC registration. This can be seen as a way to expedite the process and reduce costs associated with public offerings.
From a market perspective, Gates' decision to issue senior notes suggests confidence in their ability to attract institutional investment. This can be indicative of stable or positive company performance and a favorable outlook from large-scale investors. Institutional buyers often have access to more detailed information and conduct thorough due diligence, so their participation can be a positive signal.
The proceeds from the notes, combined with new term loans and existing cash, will be used to refinance debt, implying a strategic move to manage their debt portfolio more efficiently. Refinancing can help the company manage interest rate risk and improve their overall financial flexibility.
However, investors should also consider broader market conditions. Rising interest rates, for instance, could impact the cost of new debt and the attractiveness of refinancing options. Additionally, the demand for such notes in the current economic climate will depend on investor sentiment, which can be influenced by various macroeconomic factors.
Overall, while the move can be seen as a strategic step, it is also important to monitor how effective this refinancing is in the long run and its impact on Gates' financial stability and growth prospects.
The notes to be offered have not been and will not be registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws and, unless so registered, may not be offered or sold in
This press release is being issued pursuant to Rule 135c under the Securities Act, and it is neither an offer to sell nor a solicitation of an offer to buy any securities and shall not constitute an offer to sell or a solicitation of an offer to buy, or a sale of any securities in any jurisdiction in which such offer, solicitation or sale is unlawful.
About Gates:
Gates is a global manufacturer of innovative, highly engineered power transmission and fluid power solutions. Gates offers a broad portfolio of products to diverse replacement channel customers, and to original equipment manufacturers ("first-fit") as specified components. Gates participates in many sectors of the industrial and consumer markets. Our products play essential roles in a diverse range of applications across a wide variety of end markets ranging from harsh and hazardous industries such as agriculture, construction, manufacturing and energy, to everyday consumer applications such as printers, power washers, automatic doors and vacuum cleaners and virtually every form of transportation. Our products are sold in more than 130 countries across our four commercial regions: the
Forward‐Looking Statements and Information:
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases you can identify these forward-looking statements by the use of words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "could," "seeks," "predicts," "intends," "trends," "plans," "estimates," "anticipates" or the negative version of these words or other comparable words. These statements include, but are not limited to, statements related to our ability to commence the offering of the notes and the intended use of the proceeds thereof. Such forward-looking statements are subject to various risks and uncertainties, including, among others, economic, political and other risks associated with international operations, risks inherent to the manufacturing industry, macroeconomic factors beyond the Company's control (including material and logistics availability, inflation, supply chain and labor challenges and end-market recovery), risks related to catastrophic events, continued operation of our manufacturing facilities, including as a result of cybersecurity attacks, our ability to forecast and meet demand, market acceptance of new products, and the significant influence of the Company's large shareholders, investment funds affiliated with Blackstone Inc. Additional factors that could cause the Company's results to differ materially from those described in the forward-looking statements can be found under the section entitled "Risk Factors" of the Company's Annual Report on Form 10-K for the fiscal year ended December 30, 2023, filed with the Securities and Exchange Commission, as such factors may be updated from time to time in the Company's periodic filings with the SEC, which are accessible on the SEC's website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in the Company's filings with the SEC. The Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.
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SOURCE Gates Industrial Corporation plc
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