Adient Prices $795M of 7.50% Senior Unsecured Notes Due 2033

Adient (NYSE: ADNT), a global leader in automotive seating, has announced the pricing of a private offering of $795 million in aggregate principal amount of 7.50% senior unsecured notes due 2033. The notes will be issued at par value and are expected to close on February 3, 2025, subject to customary closing conditions. Adient plans to use the net proceeds from this offering, together with cash on hand, to redeem its existing 4.875% senior unsecured notes due 2026 and to pay fees and expenses in connection with the foregoing.

The offering of these new notes will be made in private transactions in reliance upon an exemption from the registration requirements of the Securities Act of 1933, as amended, only to persons reasonably believed to be "qualified institutional buyers" in accordance with Rule 144A under the Securities Act and to non-U.S. persons outside the United States in accordance with Regulation S under the Securities Act.

Adient's decision to issue these notes aligns with its long-term debt management strategy, as the company aims to replace higher-interest debt with lower-interest debt, thereby reducing its overall cost of borrowing. By redeeming its existing 4.875% senior unsecured notes due 2026, Adient will effectively reduce its outstanding debt and improve its debt metrics, such as its debt-to-equity ratio and interest coverage ratio.



The issuance of these notes may have potential implications on Adient's credit rating and future borrowing costs. The increase in Adient's debt-to-equity ratio and overall financial leverage could potentially lead credit rating agencies to downgrade the company's credit rating, making it more expensive for Adient to borrow in the future. Additionally, the higher interest rate on the new notes (7.50% compared to the 4.875% interest rate on the existing notes) could lead to higher borrowing costs for Adient in the future.

However, Adient's decision to redeem its existing notes and replace them with lower-interest debt demonstrates the company's commitment to managing its debt portfolio effectively and improving its financial position. By doing so, Adient is taking steps to strengthen its balance sheet and improve its creditworthiness.

In conclusion, Adient's pricing of $795 million of 7.50% senior unsecured notes due 2033 is a strategic move that aligns with the company's long-term debt management strategy. While the issuance of these notes may have potential implications on Adient's credit rating and future borrowing costs, the company's decision to redeem its existing notes and replace them with lower-interest debt demonstrates its commitment to managing its debt portfolio effectively and improving its financial position. Investors should closely monitor Adient's financial health and debt management strategy as the company continues to navigate the global automotive industry.