Unisys Sets $700 Million Senior Secured Notes Offering to Refinance Debt and Support Pension Plans

Unisys Corporation's Financial Move

In a significant move, Unisys Corporation (NYSE: UIS) has announced the pricing of a private offering of $700 million Senior Secured Notes. This offering is designed for qualified institutional buyers under Rule 144A, as well as for select international investors following Regulation S of the Securities Act of 1933. The expected closing date for this offering is set for June 27, 2025, subject to typical closing conditions.

This strategic financial maneuver coincides with Unisys's intent to commence a cash tender offer, aimed at purchasing its outstanding 6.875% Senior Secured Notes due November 1, 2027. In conjunction with this tender offer, Unisys will seek consents to amend the terms governing these existing notes to eliminate restrictive covenants and certain defaults, effectively releasing the associated collateral.

Funding Usage

The proceeds from the Senior Secured Notes are earmarked for critical financial needs. Unisys plans to utilize the net gains from this offering, along with its available cash, to execute its tender offer and cover related premiums, fees, and expenses. Additionally, these funds will be used for redeeming any remaining outstanding notes after the tender offer. Unisys aims to allocate a portion of the proceeds to address its long-term pension obligations and for general corporate purposes.

This funding plan not only aims to streamline Unisys's current debt structure but also offers a lifeline to their pension plan, a crucial aspect for ensuring the company's long-term financial health and stability. The initiative reflects Unisys's commitment to optimizing its financial position and supporting its workforce's future.

Details on Senior Secured Notes

The Senior Secured Notes will carry an interest rate of 10.625% per annum, with interest payments scheduled to be made semiannually starting January 15, 2026. These notes will be guaranteed on a senior secured basis by key domestic subsidiaries of Unisys at issuance. Going forward, guarantees will apply to any U.S. domestic subsidiary that backs Unisys's ABL credit facility or related capital market financing. Moreover, a lien on substantially all of Unisys’s assets secures the Senior Secured Notes along with guarantees from subsidiary entities. These security measures will help ensure that the interests of all parties involved are protected, reflecting a robust approach to managing the new financing arrangement.

Regulatory Compliance

It is important to note that the Senior Secured Notes are not registered under the Securities Act or any other regional securities laws. Therefore, they cannot be offered or sold in the United States unless under specific exemptions. This regulatory backdrop highlights the diligence Unisys is employing while navigating the complex financial landscape.

Forward-Looking Statements

As with any financial announcement, Unisys has issued forward-looking statements that encapsulate their expectations related to the completion of this offering and the intended use of proceeds. The company acknowledges that various risks and uncertainties could potentially lead to outcomes that differ from current expectations, emphasizing their commitment to transparency and stakeholder engagement.

In summary, Unisys Corporation's recent move to establish a $700 million offering of Senior Secured Notes is a calculated step aimed at both refinancing existing debts and fortifying its pension commitments. This initiative demonstrates the company’s proactive strategy in navigating financial challenges while setting the stage for future growth and stability within the technology solutions sector.