Realogy announced Monday its intention to raise $400 million in capital through second lien notes. Due to more demand than expected, the company is raising the round to $550 million, it announced Tuesday in a filing with the U.S. Securities and Exchange Commission.
“We were able to successfully access the market at a time of improved market conditions and upsize our pricing because of strong demand, which demonstrates investors’ confidence in Realogy’s long-term growth potential and optimism for our ability to own the recovery,” a spokesperson for Realogy said in a statement.
“Throughout the COVID-19 pandemic we have made proactive moves to help us navigate this crisis, take care of our people as much as possible and ensure Realogy comes out strong on the other side.”
Second lien notes are essentially short-term bonds that would be subordinate to senior notes or first-lien notes in the event of a bankruptcy. The 7.625 percent interest senior secured second lien notes will be due in 2025.
Realogy intends to use the net proceeds from the offering, along with cash on hand, to redeem in full its outstanding 5.250 percent Senior Notes due 2021, as well as to pay related interest and other expenses.
“Our actions today are yet another example of prudent financial management, entirely resolving near term debt maturity without impacting our consolidated debt ratio as we continue to thoughtfully manage Realogy’s financial profile, including preserving our ample liquid cash, which gives us even greater flexibility to invest in our future,” the spokesperson said.