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Insight Enterprises, Inc. Announces Proposed $500 Million Offering of Senior Notes

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Insight Enterprises (NASDAQ: NSIT) announced a proposed $500 million offering of Senior Notes due 2032. The proceeds are expected to be used to repay part of its outstanding borrowings under a senior secured revolving credit facility due 2027, with any remaining funds allocated for general corporate purposes. These senior unsecured notes will be guaranteed by the company's existing and future U.S. subsidiaries that are guarantors or borrowers under its ABL facility, subject to exceptions. The notes will be sold to qualified institutional buyers and non-U.S. persons outside the U.S. under Securities Act exemptions.

Positive
  • Proposed $500 million offering of Senior Notes due 2032.
  • Repayment of part of the outstanding borrowings under senior secured revolving credit facility due 2027.
  • Remaining proceeds to be used for general corporate purposes.
  • Senior unsecured notes guaranteed by existing and future U.S. subsidiaries.
Negative
  • The notes will be sold in transactions exempt from registration under the Securities Act, which may limit marketability.
  • The notes have not been and will not be registered under the Securities Act or any state securities laws.

Insights

Insight Enterprises is planning a $500 million offering of senior notes due in 2032. This is a significant move, as the proceeds will be used to repay part of their existing debt and for general corporate purposes. Senior notes are essentially a type of debt security, ranking above other types of debt such as subordinated debt. They are unsecured but are guaranteed by the company's U.S. subsidiaries, adding a layer of security for investors.

From a financial perspective, this offering can have several implications. Reducing reliance on the revolving credit facility may indicate the company's intention to optimize their capital structure and reduce future interest expenses since revolving credit often comes with floating interest rates. By locking in potentially lower fixed rates via senior notes, the company might be aiming for more predictable financial obligations. However, it's also important to consider that issuing new debt increases their total liabilities, which might be seen as a negative if the company isn't using the proceeds for growth-generating activities.

For retail investors, this move suggests that Insight Enterprises is actively managing its debt and seeking to potentially lower financing costs. However, there is a trade-off as increasing debt can also increase financial risk, especially if the company does not effectively deploy the remaining proceeds for profitable ventures. Additionally, note that these securities are not available to retail investors as they are being sold to qualified institutional buyers and outside the U.S.

From a market perspective, this senior notes offering indicates Insight Enterprises' current strategic priorities. They are likely seeking to capitalize on favorable market conditions for debt issuance. Debt offerings can sometimes signal confidence in the company's future cash flows, as they are effectively betting that future earnings will be sufficient to service this new debt without undue strain.

Investors should note that the use of proceeds for general corporate purposes is somewhat vague but can include a range of activities from operational expansion to potential acquisitions. This flexibility can be a double-edged sword; while it allows management to capitalize on opportunities as they arise, it also lacks the specificity that might provide more immediate assurance to investors.

Moreover, the fact that these notes will be offered in a private placement rather than a public offering suggests that Insight Enterprises might be targeting sophisticated investors who are more familiar with the risks and rewards of such an investment and who might require less stringent disclosures compared to a public offering.

CHANDLER, Ariz.--(BUSINESS WIRE)-- Insight Enterprises, Inc. (NASDAQ: NSIT) (the “Company”) announced today that it intends to offer, subject to market and other conditions, $500 million aggregate principal amount of Senior Notes due 2032 (the “notes”). The Company expects to use the net proceeds of the offering to repay a portion of the outstanding borrowings under its senior secured revolving credit facility due 2027 and, to the extent of any remaining net proceeds, for general corporate purposes.

The notes will be senior unsecured obligations of the Company and will be guaranteed on a senior unsecured basis by each of its existing and future direct and indirect U.S. subsidiaries that is or becomes a guarantor or borrower under its ABL facility, subject to certain exceptions.

The notes will be offered and sold in a transaction exempt from registration under the Securities Act of 1933 (the “Securities Act”) only to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act and to non-U.S. persons outside the United States in reliance on Regulation S under the Securities Act.

This press release is for informational purposes only and is neither an offer to sell nor a solicitation of an offer to buy any security, including the notes, and shall not constitute an offer to sell or a solicitation of an offer to buy, or a sale of, the notes or any other security in any jurisdiction in which such offer, solicitation, or sale is unlawful. The notes have not been and will not be registered under the Securities Act or any state securities laws, and may not be offered or sold in the United States absent registration under the Securities Act or an applicable exemption from the registration requirements of the Securities Act and applicable state laws.

Forward-Looking Information

Certain statements in this release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, including those with respect to the proposed offering, the expected terms of the notes and the expected use of proceeds, are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. There can be no assurances that the results discussed by the forward-looking statements will be achieved, and actual results may differ materially from those set forth in the forward-looking statements. Some of the important factors that could cause the Company’s actual results to differ materially from those projected in any forward-looking statements include, but are not limited to, the following, which are discussed in the Company’s filings with the Securities and Exchange Commission (the “SEC”), including in the “Risk Factors” sections of the Company’s most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings with the SEC: actions of our competitors, including manufacturers and publishers of products we sell; our reliance on our partners for product availability, competitive products to sell and marketing funds and purchasing incentives, which can change significantly in the amounts made available and in the requirements year over year; our ability to keep pace with rapidly evolving technological advances and the evolving competitive marketplace; general economic conditions, economic uncertainties and changes in geopolitical conditions, including the possibility of a recession or a decline in market activity as a result of the ongoing conflicts in Ukraine and Gaza; changes in the IT industry and/or rapid changes in technology; our ability to provide high quality services to our clients; our reliance on independent shipping companies; the risks associated with our international operations; supply constraints for products; natural disasters or other adverse occurrences, including public health issues such as pandemics or epidemics; disruptions in our IT systems and voice and data networks; cyberattacks, outages, or third-party breaches of data privacy as well as related breaches of government regulations; intellectual property infringement claims and challenges to our registered trademarks and trade names; potential liability and competitive risk based on the development, adoption, and use of generative artificial intelligence; legal proceedings, client audits and failure to comply with laws and regulations; risks of termination, delays in payment, audits and investigations related to our public sector contracts; exposure to changes in, interpretations of, or enforcement trends related to tax rules and regulations; our potential to draw down a substantial amount of indebtedness; the conditional conversion feature of the Company’s convertible notes, which has been triggered, and may adversely affect the Company’s financial condition and operating results; the Company is subject to counterparty risk with respect to certain hedge and warrant transactions entered into in connection with the issuance of the Company’s convertible notes; increased debt and interest expense and the possibility of decreased availability of funds under our financing facilities; possible significant fluctuations in our future operating results as well as seasonality and variability in client demands; potential contractual disputes with our clients and third-party suppliers; our dependence on certain key personnel and our ability to attract, train and retain skilled teammates; risks associated with the integration and operation of acquired businesses, including achievement of expected synergies and benefits; and future sales of the Company’s common stock or equity-linked securities in the public market could lower the market price for our common stock.

Additionally, there may be other risks that are otherwise described from time to time in the reports that the Company files with the SEC. Any forward-looking statements in this release speak only as of the date on which they are made and should be considered in light of various important factors, including the risks and uncertainties listed above, as well as others. The Company assumes no obligation to update, and, except as may be required by law, does not intend to update, any forward-looking statements.

NSIT-F

Ryan Miyasato

Investor Relations

Tel. (408) 975-8507

Email: Ryan.Miyasato@insight.com

Source: Insight Enterprises Inc.

FAQ

What is Insight Enterprises proposing in their recent press release?

Insight Enterprises is proposing a $500 million offering of Senior Notes due 2032.

How will Insight Enterprises use the proceeds from the $500 million offering?

The proceeds will be used to repay a portion of its outstanding borrowings under a senior secured revolving credit facility due 2027 and for general corporate purposes.

What type of obligations are the senior notes announced by Insight Enterprises?

The senior notes are senior unsecured obligations guaranteed by the company's U.S. subsidiaries under its ABL facility, subject to exceptions.

Who can purchase the Senior Notes offered by Insight Enterprises?

The notes will be sold to qualified institutional buyers and non-U.S. persons outside the U.S. under exemptions from the Securities Act.

Are the Senior Notes offered by Insight Enterprises registered under the Securities Act?

No, the notes are not registered and will not be registered under the Securities Act or any state securities laws.

Insight Enterprises Inc

NASDAQ:NSIT

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