01—Abstract
Summary
Summary of the 8-K filed November 19, 2024. Cited figures are marked; the original filing is the authoritative source.
On November 19, 2024, Otis Worldwide Corporation issued two note offerings.
The Company issued $600 milliona aggregate principal amount of 5.125% Notes due November 19, 2031 (the "Otis Notes"), with estimated net proceeds of approximately $594.5 million. Its subsidiary Highland Holdings S.à r.l., an indirect wholly-owned consolidated subsidiary, issued €850 million aggregate principal amount of 2.875% Notes due November 19, 2027 (the "Highland Notes"), fully and unconditionally guaranteed by the Company. Highland's estimated net proceeds were approximately €842 million, or $902 million, based on the euro/U.S. dollar exchange rate as of November 8, 2024.
The Company and Highland intend to use the combined proceeds of both offerings to repay at maturity the Company's 2.056% notes due April 5, 2025, of which $1.3 billionb principal amount is currently outstanding. The Company expects to use the remaining proceeds to repay certain commercial paper borrowings and for general corporate purposes. Both series of notes are unsecured, unsubordinated obligations ranking equally with existing and future unsecured, unsubordinated indebtedness.
The indentures contain customary restrictions limiting liens, certain fundamental changes, and sale and leaseback transactions, along with customary events of default. Both series carry change of control put rights at 101%c of principal plus accrued interest. The notes were registered under the Company's shelf registration statement on Form S-3ASR filed March 24, 2023.
02—Key points
Key Highlights
- Otis Worldwide issued $600 million of 5.125% Notes due 2031, with net proceeds of approximately $594.5 million after underwriting discount and expenses.
- Highland Holdings S.à r.l., an indirect wholly-owned subsidiary, issued €850 million of 2.875% Notes due 2027, with net proceeds of approximately €842 million, or $902 million.
- The Highland Notes are fully and unconditionally guaranteed on an unsecured, unsubordinated basis by Otis Worldwide Corporation.
- Proceeds are intended to repay at maturity the 2.056% notes due April 5, 2025 ($1.3 billion principal outstanding), with the remainder used to repay certain commercial paper and for general corporate purposes.
- Both note series are unsecured, unsubordinated obligations ranking equally with existing and future unsecured, unsubordinated debt.
- Both series have make-whole optional redemption before their par call dates (September 19, 2031 for Otis Notes; October 19, 2027 for Highland Notes) and a 101% change of control put.
- The Otis Indenture limits liens, certain fundamental changes, and sale and leaseback transactions, and contains customary events of default.
03—Questions
Frequently Asked Questions
How much capital did Otis raise from these note offerings?
The Company issued $600 million of Otis Notes, with estimated net proceeds of about $594.5 million. Highland issued €850 million of Highland Notes, with estimated net proceeds of about €842 million, or $902 million, based on the euro/U.S. dollar rate as of November 8, 2024.
What will the proceeds be used for?
The Company and Highland intend to use the net proceeds from both offerings to fund the repayment at maturity of the Company's 2.056% notes due April 5, 2025, of which $1.3 billion principal amount is currently outstanding. The remainder is expected to repay certain commercial paper borrowings and fund general corporate purposes.
When do the notes mature and what interest do they pay?
The Otis Notes bear 5.125% interest and mature November 19, 2031, with interest payable May 19 and November 19 each year beginning May 19, 2025. The Highland Notes bear 2.875% interest and mature November 19, 2027, with interest payable each November 19 beginning November 19, 2025.
Can the notes be redeemed early, and what happens on a change of control?
Both series may be redeemed before their par call dates (September 19, 2031 for Otis Notes; October 19, 2027 for Highland Notes) at a make-whole premium plus accrued interest, and at 100% of principal plus accrued interest afterward. Highland Notes may also be redeemed in whole for certain tax law developments. Upon a Change of Control Triggering Event, holders may require purchase at 101% of principal plus accrued interest, unless the issuer redeems the notes.
Who guarantees the Highland Notes and how do they rank?
Otis Worldwide Corporation fully and unconditionally guarantees the Highland Notes on an unsecured, unsubordinated basis. The Highland Notes and the parent guarantee are unsecured, unsubordinated obligations that rank equally in right of payment with each entity's existing and future unsecured, unsubordinated indebtedness.
04—Continue