ScottsMiracle-Gro (SMG) Puts Out Senior Notes Exchange Offer
ScottsMiracle-Gro's (SMG) exchange offer is made to fulfill the company's obligations per a registration rights agreement.
The ScottsMiracle-Gro Company SMG recently announced the commencement of a registered exchange offer to exchange any and all of its $500,000,000 total principal amount of 4% Senior Notes due 2031.
These were issued in a private placement on Mar 17, 2021, for an equal principal amount of its 4% Senior Notes due 2031, which have been registered under the Securities Act of 1933, as amended.
The exchange offer is made to fulfill the company’s obligations per a registration rights agreement. The agreement was related to the issuance of original notes, which the company entered into on Mar 17, 2021. It does not represent a new financing transaction and won’t receive further proceeds from the exchange offer.
There is much similarity in terms of the exchange notes and the original notes, barring certain transfer restrictions, registration rights and additional interest provisions that do not apply to the exchange notes. The original notes that are not exchanged in the offer will remain subject to existing transfer restrictions. The company will generally have no further obligation to provide for the registration of those notes under the Securities Act of 1933, as amended.
The exchange offer will expire at 11:59 p.m., New York City time, on Jan 20, 2022, unless extended by the company. Tenders of original notes must be validly made at or before the expiration time and may be withdrawn prior to the expiration time. The exchange offer terms are described in a prospectus dated Dec 22, 2021, and the related letter of transmittal.
Shares of Scotts Miracle-Gro have declined 17% in the past year against a 44.4% rise of the industry.
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Scotts Miracle-Gro, in its last earnings call, stated that it expects sales in the Hawthorne segment for fiscal 2022 to rise 8-12%. U.S. Consumer sales growth guidance is expected to be 0 to -4%. It expects company-wide sales growth of 0-3%.
The gross margin rate is projected to decline 100-150 basis points (bps) year over year. The company also expects adjusted earnings per share in the range of $8.50-$8.90 for the full year.
The company noted that the current over-supply of cannabis is expected to put pressure on its growth rate through the rest of the calendar year and into the second quarter in the Hawthorne segment, at which point it expects a more normal growth rate.
Zacks Rank & Key Picks
Scotts Miracle-Gro currently carries a Zacks Rank #3 (Hold).
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