Sensata Technologies Holding plc Announces Offering of $500 Million of Senior Notes by Sensata Technologies, Inc.

Rhea-AI Summary

Sensata Technologies Holding announced that its subsidiary, Sensata Technologies, Inc., plans to offer $500 million in senior notes in a private offering exempt from registration under the Securities Act of 1933. These notes will be guaranteed on a senior unsecured basis by Sensata Technologies B.V. and its wholly-owned subsidiaries. The notes rank equally with the issuer's existing senior debt but are junior to secured debt. Proceeds will be used, along with cash on hand, to redeem Sensata Technologies B.V.’s 5.000% senior notes due October 2025, expected in July 2024. The offering targets qualified institutional buyers under Rule 144A and non-U.S. persons under Regulation S. This announcement does not constitute an offer to sell the notes in any jurisdiction where such an offer is unlawful.

Positive

• Sensata Technologies plans to raise $500 million through senior notes, potentially strengthening its financial position.
• The notes will rank equally with existing senior debt, ensuring parity in repayment priority.
• Proceeds will be used to redeem existing 5.000% senior notes due 2025, potentially lowering interest expenses.
• The private nature of the offering targets qualified institutional buyers and non-U.S. persons, indicating a focused and strategic fundraising approach.
• Sensata Technologies has a diversified global presence with operations in 16 countries, providing a stable revenue base.

Negative

• The new debt offering increases the company's leverage, which may affect its financial flexibility.
• The notes are junior to secured debt, posing higher risks in case of asset liquidation.
• Redemption of the 5.000% senior notes will rely partly on cash on hand, potentially reducing liquidity.
• The offering's private nature restricts resale and may limit marketability of the notes.
• Structural subordination to the obligations of non-guaranteeing subsidiaries may pose risks to noteholders.

Financial Analyst

Sensata Technologies' offering of $500 million in senior notes signifies a strategic financial maneuver aimed at refinancing existing debt. This move will likely lead to a reduction in interest expenses, as the new notes will be used to redeem the 5.000% senior notes due October 1, 2025. By potentially securing a lower interest rate on the new debt, Sensata could improve its financial health over the long term. However, there are risks associated with market conditions and interest rate fluctuations that could impact the terms of the new notes. Investors should watch for the pricing details and compare the new interest rate to the old one to gauge immediate financial impacts.

Additionally, the notes being senior unsecured obligations means they are not backed by specific assets but will have a high priority in claims over other debt in the event of default. This maintains a balanced risk profile for Sensata's overall debt structure.

Market Research Analyst

The market reception of Sensata's new senior notes offering will be a key factor in understanding investor sentiment towards the company's future prospects. Given that the notes will be offered exclusively to qualified institutional buyers and non-U.S. persons, the demand from these sophisticated investors will signal confidence in Sensata's strategic direction. The ability to attract substantial interest in the offering would underscore the market's positive outlook on Sensata's financial management and growth potential.

Conversely, if the uptake is lukewarm, it may indicate concerns around Sensata's current market position or the overall economic environment. Investors should monitor the final terms of the offering, including the interest rate achieved and the level of oversubscription, as these will provide further insights into market confidence.

SWINDON, United Kingdom--(BUSINESS WIRE)-- Sensata Technologies Holding plc (NYSE: ST) (“Sensata Technologies”) today announced that its indirect wholly owned subsidiary Sensata Technologies, Inc. (the “Issuer”) intends to offer, subject to market and other customary conditions, $500 million in aggregate principal amount of senior notes (the “Notes”) in a private offering that is exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”).

The Notes will be guaranteed on a senior unsecured basis by the Issuer’s indirect parent Sensata Technologies B.V. (“STBV”) and each of STBV’s wholly-owned subsidiaries (other than the Issuer) that is a guarantor under the Issuer’s senior credit facilities and a guarantor under the outstanding series of existing senior notes of the Issuer and STBV. The Notes and the guarantees will be the Issuer’s and the guarantors’ senior unsecured obligations and will rank equally in right of payment to all existing and future senior indebtedness of the Issuer or the guarantors, respectively, including the senior credit facilities and outstanding series of existing senior notes. The Notes and the guarantees will be senior to all of the Issuer’s and the guarantors’ future indebtedness that is expressly subordinated to the Notes and the guarantees. The Notes and the guarantees will be effectively junior to the Issuer’s and the guarantors’ existing and future secured indebtedness to the extent of the value of the assets securing such indebtedness, including indebtedness under the senior credit facilities, and will be structurally subordinated to all of the existing and future obligations of any of STBV’s subsidiaries (other than the Issuer) that do not guarantee the Notes.

Sensata intends to use the net proceeds from the offering of the Notes, together with cash on hand, for the redemption of STBV’s 5.000% senior notes due October 1, 2025, which Sensata expects to effect in July 2024.

The Notes and the related guarantees will be offered only to persons reasonably believed to be “qualified institutional buyers” in reliance on the exemption from registration provided by Rule 144A under the Securities Act and to non-U.S. persons outside the United States in compliance with Regulation S under the Securities Act. The Notes and the related guarantees have not been and will not be registered under the Securities Act or the securities laws of any state or other jurisdiction and may not be offered or sold in the United States without registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities or blue sky laws or outside the United States except in compliance with foreign securities laws.

This press release is for informational purposes only and shall not constitute an offer to sell or a solicitation of an offer to buy the Notes or any other securities. The Notes offering is not being made to any person in any jurisdiction in which the offer, solicitation or sale is unlawful. Any offers of the Notes will be made only by means of a private offering memorandum.

About Sensata Technologies

Sensata Technologies is a global industrial technology company striving to create a cleaner, more efficient, electrified and connected world. Through its broad portfolio of sensors, electrical protection components and sensor-rich solutions which create valuable business insights, Sensata helps its customers address increasingly complex engineering and operating performance requirements. With more than 21,000 employees and global operations in 16 countries, Sensata serves customers in the automotive, heavy vehicle & off-road, industrial, and aerospace markets.

Safe Harbor Statement

Statements in this release which are not historical facts, such as those that may be identified by the use of words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “feel,” “forecast,” “intend,” “may,” “plan,” “potential,” “project,” “should,” “would,” and similar expressions, are forward-looking statements under the provisions of the Private Securities Litigation Reform Act of 1995. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. These risks and uncertainties include, but are not limited to, the consummation of the offering by the Issuer and the use of proceeds. Detailed information about some of the other known risks is included in our Annual Report on Form 10-K for the year ended December 31, 2023 and our other reports filed with the Securities and Exchange Commission. Because actual results could differ materially from our intentions, plans, expectations, assumptions and beliefs about the future, you are urged to view all forward-looking statements contained in this news release with caution. Except as required by applicable law, we do not undertake to publicly update or revise any of these forward-looking statements, whether as a result of new information, future events, or otherwise.

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Media & Investor:



Alexia Taxiarchos

+1 (508) 236-1761

ataxiarchos@sensata.com

investors@sensata.com

Source: Sensata Technologies Holding plc

FAQ

What is Sensata Technologies' offering?

Sensata Technologies is offering $500 million in senior notes.

How will Sensata Technologies use the proceeds from the note offering?

Proceeds will be used to redeem Sensata Technologies B.V.'s 5.000% senior notes due October 2025.

When does Sensata Technologies expect to redeem the existing senior notes?

Sensata Technologies expects to redeem the existing senior notes in July 2024.

Who are the target buyers for Sensata Technologies' senior notes?

The target buyers are qualified institutional buyers under Rule 144A and non-U.S. persons under Regulation S.

What is the ranking of the new senior notes?

The new senior notes will rank equally with existing senior debt but junior to secured debt.