CRH wants to replace Arcosa's bonds. What changes for holders?
The $1 billion offer changes the borrower and adds a parent guarantee for investors who exchange. Keeping the old bonds could also mean fewer protections.
CRH wants to buy or exchange $1 billion of bonds inherited with Arcosa. Investors who exchange would keep the interest rates and maturity dates, but the borrower would become a CRH financing subsidiary with a CRH parent-company guarantee.
The proposal also reaches investors who keep the old bonds. CRH is seeking consent to remove certain restrictions, default provisions and guarantees from the existing Arcosa notes.
Cash prices favor an early answer
The two bond series have different cash prices. Holders meeting the November 18 early deadline would receive an extra $50 for each $1,000 of principal accepted. Accrued interest is paid separately.
| Arcosa bond | Early price | Later price |
|---|---|---|
| 4.375% due 2029 | $983.75 | $933.75 |
| 6.875% due 2032 | $1,035.00 | $985.00 |
Research by Ticker Byline shows that if all the bonds were accepted for cash at the early prices, the payment would total $1.0145 billion before interest, or $14.5 million above their combined face value.
Eligible investors can instead receive $1,000 of replacement bonds for each $1,000 of old principal by the early deadline. The later exchange offers $950 of new principal. The coupon rates and maturities stay the same.
Why staying put may also change the terms
Tendering through either route supplies consent to the proposed amendments. Cash tenders and exchanges can count together toward the required consent threshold for each bond series.
The amendments require sufficient consents and the applicable purchase or exchange to become operative. If they do, holders who retain the old Arcosa bonds would have fewer contractual protections.
The early deadline is 5 p.m. New York time on November 18. The offers expire at the same time on December 4, unless extended.
The acquisition is already complete
CRH acquired Arcosa on October 23. A concurrent proposed public bond issue is intended to fund accepted cash tenders and repay its drawn $3.25 billion acquisition bridge, with remaining proceeds intended for general corporate purposes.
Our CRH company profile follows the acquisition financing alongside the September results and the company's latest outlook.