Honeywell's Unit Prices Senior Notes Offering at $1B in Aggregate

Honeywell International Inc.’s HON business unit, Solstice Advanced Materials Inc. (Solstice), as part of the previously announced spin-off from the former, priced an offering of $1 billion for its senior notes (notes) in aggregate. The private offering comprises $1 billion of 5.625% notes due to expire on Sept. 30, 2033. Subject to customary closing conditions, this offering is anticipated to close around Sept. 30, 2025.

As communicated by the company, the notes will be offered at par value. Interest rates on the notes set to expire in 2033 will be paid semi-annually on March 31 and Sept. 30, starting from March 31, 2026.

Solstice plans to secure a senior secured term B loan facility, a senior secured revolving credit facility and one or more uncommitted letter of credit facilities, jointly referred to as the senior credit facilities. The business unit expects to use a portion of the funds raised from the notes, along with that from borrowings under the senior secured term B loan facility, to pay Honeywell for the spin-off and to cover fees and expenditures related to the notes offering and senior credit facilities. The remaining amount will be utilized for general corporate purposes.

There will be an escrow arrangement for the proceeds from the notes offering till all the conditions for completing the spin-off and other related requirements are satisfied. If such conditions are not fulfilled by March 31, 2026, the notes are expected to be redeemed at 100% of the principal amount, together with any accumulated interest.

Solstice Spin-Off Expected Soon

In October 2024, Honeywell declared its intention to spin off its advance materials business. This spin-off is expected to create an independent, publicly traded company named Solstice Advanced Materials, which will be based in Morris Plains, NJ. The company offers protective fibers, semiconductor materials, refrigerants and healthcare packaging. It has two operating business segments, namely Refrigerants & Applied Solutions and Electronic & Specialty Materials. Subject to customary closing conditions, the transaction is anticipated to be closed in fourth-quarter 2025.

HON’s Zacks Rank

Strength in the defense business and growth in air transport flight hours augur well for Honeywell. Solid demand for building products also bodes well for the company.

In the past year, this Zacks Rank #3 (Hold) company’s shares have risen 4.6% compared with the industry’s 0.1% growth.

However, weakness in the Industrial Automation segment due to lower demand for projects is worrisome. The weakened demand for productivity solutions and services is also concerning.

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This article originally published on Zacks Investment Research (zacks.com).

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