Vivint Smart Home, Inc. (“VSH” and, together with its subsidiaries, “Vivint” or the “Company”) and APX Group Holdings, Inc. (“APX Group”), VSH’s direct, wholly owned subsidiary, today announced that their wholly owned subsidiary, APX Group, Inc. (“APX”), priced its offering of $600.0 million aggregate principal amount of senior secured notes (the “Notes”) in a private placement. The Notes will bear interest at 6.75% per annum and are due in 2027. The Notes offering is expected to close on February 14, 2020, subject to customary closing conditions.
Vivint also announced that, concurrently with the Notes offering, APX intends to amend and restate the credit agreements governing its existing revolving credit facility and term loan credit facility (the “Concurrent Refinancing Transactions”). In connection therewith, APX intends to, among other things, (i) extend the maturity date with respect to the revolving credit facility and increase the aggregate commitments in respect of the revolving credit facility to $350.0 million and (ii) incur $950.0 million aggregate principal amount of term loans.
Vivint intends to use the net proceeds from the Notes offering and Concurrent Refinancing Transactions, together with the proceeds from its previously announced merger with Mosaic Acquisition Corp. completed on January 17, 2020, to (i) redeem all of APX’s outstanding 8.750% Senior Notes due 2020 (the “2020 Notes”), (ii) redeem all of APX’s outstanding 8.875% Senior Secured Notes due 2022 (the “2022 Private Placement Notes”), (iii) refinance in full borrowings under APX’s existing term loan facility and revolving credit facility, (iv) redeem a portion of APX’s outstanding 7.875% Senior Secured Notes due 2022 (the “existing 7.875% Notes”) and (v) pay the related accrued interest and fees and expenses related thereto. Vivint intends to use any remaining net proceeds for general corporate purposes, which may include repayment of additional indebtedness. No assurances may be given that these transactions will be completed on the timeline, in the amount or on the terms presently contemplated by the Company or at all.
The Notes to be offered have not been and will not be registered under the Securities Act of 1933, as amended (the “Securities Act”) or any state securities laws. The Notes may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. The Notes will be offered, by the initial purchasers, only to persons reasonably believed to be “qualified institutional buyers” in reliance on the exemption from registration provided by Rule 144A under the Securities Act and to certain non-U.S. persons in offshore transactions in reliance on Regulation S.
This press release is being issued pursuant to Rule 135(c) under the Securities Act, and it does not constitute an offer to sell or the solicitation of an offer to buy any securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful.
Nothing in this press release constitutes a notice of redemption with respect to the 2020 Notes, the 2022 Private Placement Notes or the 7.875% Notes.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements may be preceded by, followed by or include the words “believes,” “estimates,” “expects,” “projects,” “forecasts,” “may,” “will,” “should,” “seeks,” “plans,” “scheduled,” “anticipates” or “intends” or similar expressions. Such forward-looking statements are subject to various risks, uncertainties and assumptions including, among others, the risk that the Mosaic Transaction disrupts the Company’s current plans and operations, the ability to realize the anticipated benefits of the Mosaic Transaction, which may be affected by, among other things, competition and the ability of the combined business to grow and manage growth profitably, costs related to the Mosaic Transaction, risks of the smart home and security industry, including risks of and publicity surrounding the sales, subscriber origination and retention process, the highly competitive nature of the smart home and security industry and product introductions and promotional activity by our competitors, litigation, complaints product liability claims and/or adverse publicity, the impact of changes in consumer spending patterns, consumer preferences, local, regional, and national economic conditions, crime, weather, demographic trends and employee availability, increases and/or decreases in utility and other energy costs, increased costs related to utility or governmental requirements, cost increases or shortages in security and smart home technology products or components, the introduction of unsuccessful new Smart Home Services, privacy and data protection laws, privacy or data breaches or the loss of data, the impact to the Company’s business and results of operations, financial condition, regulatory compliance and customer experience of the Vivint Flex Pay plan and our ability to successfully compete in retail sales channels and risks related to our exposure to variable rates of interest with respect to our revolving credit facility and term loan facility. In addition, the origination and retention of new subscribers will depend on various factors, including, but not limited to, market availability, subscriber interest, the availability of suitable components, the negotiation of acceptable contract terms with subscribers, local permitting, licensing and regulatory compliance, and the Company’s ability to manage anticipated expansion and to hire, train and retain personnel, the financial viability of subscribers and general economic conditions.
Additional factors that could cause the Company’s results to differ materially from those described in the forward-looking statements can be found in the “Risk Factors” sections of VSH’s proxy statement/information statement/prospectus dated December 26, 2019, filed with the Securities and Exchange Commission (the “SEC”) pursuant to Rule 424(b) of the Securities Act on December 26, 2019 and APX Group’s Annual Report on Form 10-K/A for the fiscal year ended December 31, 2018 filed with the SEC, as such factors may be updated from time to time in VSH’s and APX Group’s periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in VSH’s and APX Group’s filings with the SEC. VSH and APX Group undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.