Textron Inc. (NYSE: TXT) today announced it has completed its previously announced concurrent public offerings of its 4.50% convertible senior notes due 2013 and 23,805,000 shares of its common stock, including the exercise in full of the underwriters’ options to purchase additional securities in each of the offerings. Textron received total net proceeds from the offerings of approximately $821 million, after deducting underwriting discounts and commissions and before offering expenses payable by Textron.
The convertible senior notes pay interest semi-annually at a rate of 4.50% and are convertible, under certain circumstances, into cash or shares of Textron common stock, or a combination of cash and shares, at the option of Textron, at a conversion rate of 76.1905 shares of common stock per $1,000 principal amount of convertible senior notes, which is equivalent to an initial conversion price of approximately $13.125 per share of common stock, subject to adjustment in certain circumstances. This initial conversion price represents a premium of 25% relative to the public offering price of Textron’s common stock of $10.50 per share in the common stock offering.
Textron may not redeem the convertible senior notes prior to their maturity. Holders of the convertible senior notes may require Textron to repurchase all or a portion of their convertible senior notes upon a fundamental change at a cash repurchase price equal to 100% of the principal amount thereof to be repurchased plus accrued and unpaid interest. The convertible senior notes rank equally in right of payment with Textron’s existing and future senior unsecured indebtedness.
Textron used a portion of the net proceeds from the common stock offering to pay the cost of certain bond hedge transactions entered into concurrently with the offering of the convertible senior notes, after such cost was partially offset from the sale of certain warrant transactions entered into concurrently with the offering of the convertible senior notes. Textron intends to use the balance of the net proceeds from the common stock offering, together with the net proceeds from the convertible notes offering, which is expected to total approximately $775 million, to increase Textron’s liquidity and for general corporate purposes, including the repayment of consolidated debt.
Goldman, Sachs & Co. and J.P. Morgan Securities Inc. acted as joint book-running managers for the offerings.
About Textron
Textron Inc. is a multi-industry company that leverages its global network of aircraft, defense, industrial and finance businesses to provide customers with innovative solutions and services. Textron is known around the world for its powerful brands such as Bell Helicopter, Cessna Aircraft Company, Jacobsen, Kautex, Lycoming, E-Z-GO, Greenlee, and Textron Systems.
Certain statements in this press release and other oral and written statements made by us from time to time are forward-looking statements, including those that discuss the use of net proceeds from the offerings and possible adjustments to the conversion rate of the convertible senior notes and the effects of the bond hedge transactions entered into concurrently with the offering thereof, as well as strategies, goals, outlook or other non-historical matters, or project revenues, income, returns or other financial measures. These forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update or revise any forward-looking statements. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those contained in the statements, including: (a) changes in worldwide economic or political conditions that impact demand for our products, interest rates and foreign exchange rates; (b) the interruption of production at our facilities or our customers or suppliers; (c) performance issues with key suppliers, subcontractors and business partners; (d) our ability to perform as anticipated and to control costs under contracts with the U.S. Government; (e) the U.S. Government’s ability to unilaterally modify or terminate its contracts with us for the U.S. Government’s convenience or for our failure to perform, to change applicable procurement and accounting policies, and, under certain circumstances, to suspend or debar us as a contractor eligible to receive future contract awards; (f) changing priorities or reductions in the U.S. Government defense budget, including those related to Operation Iraqi Freedom, Operation Enduring Freedom and the Global War on Terrorism; (g) changes in national or international funding priorities, U.S. and foreign military budget constraints and determinations, and government policies on the export and import of military and commercial products; (h) legislative or regulatory actions impacting our operations or demand for our products; (i) the ability to control costs and successful implementation of various cost-reduction programs, including the enterprise-wide restructuring program; (j) the timing of new product launches and certifications of new aircraft products; (k) the occurrence of slowdowns or downturns in customer markets in which our products are sold or supplied or where Textron Financial Corporation (TFC) offers financing; (l) changes in aircraft delivery schedules, or cancellation or deferral of orders; (m) the impact of changes in tax legislation; (n) the extent to which we are able to pass raw material price increases through to customers or offset such price increases by reducing other costs; (o) our ability to offset, through cost reductions, pricing pressure brought by original equipment manufacturer customers; (p) our ability to realize full value of receivables; (q) the availability and cost of insurance; (r) increases in pension expenses and other postretirement employee costs; (s) TFC’s ability to maintain portfolio credit quality and certain minimum levels of financial performance required under its committed credit facilities and under Textron’s support agreement with TFC; (t) TFC’s access to financing, including securitizations, at competitive rates; (u) our ability to successfully exit from TFC’s commercial finance business, other than the captive finance business, including effecting an orderly liquidation or sale of certain TFC portfolios and businesses; (v) uncertainty in estimating market value of TFC’s receivables held for sale and reserves for TFC’s receivables to be retained; (w) uncertainty in estimating contingent liabilities and establishing reserves to address such contingencies; (x) risks and uncertainties related to acquisitions and dispositions, including difficulties or unanticipated expenses in connection with the consummation of acquisitions or dispositions, the disruption of current plans and operations, or the failure to achieve anticipated synergies and opportunities; (y) the efficacy of research and development investments to develop new products; (z) the launching of significant new products or programs which could result in unanticipated expenses; (aa) bankruptcy or other financial problems at major suppliers or customers that could cause disruptions in our supply chain or difficulty in collecting amounts owed by such customers; and (bb) continued volatility and further deterioration of the capital markets, as well as other events, factors and risks previously and from time to time disclosed in filings with the SEC, including, but not limited to, the “Risk Factors” section in each of the preliminary prospectus supplements and related prospectus relating to our offerings, our Annual Report on Form 10-K and our most recent Quarterly Report on Form 10-Q.
Contacts:
Textron
Investor Contacts:
Doug Wilburne or Bill Pitts,
401-457-2288
or
Media Contact:
Karen Gordon
Quintal, 401-457-2362