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ADT's Subsidiaries to Buy Back $300M Worth Senior Notes

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·4 min read
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ADT Inc. ADT announced that its three subsidiaries offer to buy back $300 million worth of senior notes. Among the offerors are Prime Finance Inc., The ADT Security Corporation and Prime Security Services Borrower, LLC. The tender offers will help lower ADT’s debts.

It is worth mentioning here that the company’s share price increased 8.89% on Dec 4, ending the trading session at $8.45.

Inside the Headlines

As mentioned, the tender offer by ADT’s indirect wholly-owned subsidiaries is applicable for second-priority senior secured notes carrying a coupon rate of 6.250% and maturing in 2028 as well as for first-priority senior secured notes with a 4.875% coupon rate and maturity in 2032.

For every $1000 principal amount, ADT will pay total consideration of $1,072.50 for the 2028 notes and $1065.00 for the 2032 notes. The considerations are applicable only when the notes have been validly tendered before five in the evening on Dec 17, 2020.

For notes that are tendered post the above-mentioned date and time till Jan 4, 2021, ADT will pay a consideration of $1,042.50 for the 2028 notes and $1,035.00 for the 2032 notes.

The early settlement date and the final settlement date have been fixed at Dec 18, 2020, and Jan 5, 2021.

ADT will use available cash, including the amount received from equity investment by Google, for funding the tender offer. Notably, Google invested $450 million in ADT through an equity purchase transaction in September this year.

It is worth mentioning here that the company's long-term debt at the end of the third quarter of 2020 stood at $9,675 million versus $9,634 million at the end of 2019. Notably, it raised $2,640 million from long-term borrowings and repaid $2,748 million of long-term borrowings (inclusive of call premiums) in the first three quarters of 2020.

Zacks Rank and Stocks to Consider

With a market capitalization of $6.4 billion, ADT currently carries a Zacks Rank #3 (Hold). Its share price has decreased 18.1% in the past three months against the industry’s growth of 10.3%.




 

Meanwhile, the Zacks Consensus Estimate for its earnings is pegged at $1.10 for 2020 and $1.01 for 2021, reflecting a decline of 2.7% and growth of 2% from the respective 60-day-ago figures. Also, the estimate for the fourth quarter at 29 cents has been unchanged in the past two months.

ADT Inc. Price and Consensus

 

ADT Inc. Price and Consensus
ADT Inc. Price and Consensus

ADT Inc. price-consensus-chart | ADT Inc. Quote

Three better-ranked stocks in the industry are Ituran Location and Control Ltd. ITRN, Brady Corporation BRC and Fortune Brands Home & Security, Inc. FBHS. While Ituran Location currently sports a Zacks Rank #1 (Strong Buy), both Brady and Fortune Brands carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates have improved for these stocks for the current year. Further, average earnings surprise in the last four quarters was positive 36.25% for Ituran Location, 2.95% for Brady and 23.02% for Fortune Brands.

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