UPDATE: Realogy announced Tuesday it upsized the capital raise to $550 million, citing better than expected demand for the second lien notes.
Realogy is looking to raise $400 million in capital through second-lien notes — essentially short term bonds that would be subordinate to senior notes or first-lien notes in the event of a bankruptcy — the company announced Monday morning in an 8-K filing with the U.S. Securities and Exchange Commission.
The company intends to use the money raised through the offering, along with current cash on hand to redeem approximately $400 million of its outstanding senior notes that are due in 2021 at 5.25 percent interest.
The pricing of the second lien notes will likely come later Monday or Tuesday.
The amount the company is looking to raise is also the exact amount that Realogy was set to sell Cartus’ relocation services brand for, to SIRVA Worldwide. SIRVA has since attempted to back out of the deal, which compelled Realogy to sue SIRVA Worldwide. That deal remains in legal limbo.
Realogy, the nation’s largest real estate holding company with brands like Coldwell Banker, Century 21, Corcoran, Better Homes and Gardens Real Estate, ERA Real Estate and Sotheby’s International Realty, aimed to use the proceeds of that deal to pay-off some debt.
The company, in the filing, said the second lien notes will be secured by the same collateral as the first lien notes.
Realogy’s stock, like others in the real estate industry, has been on a steady upswing over the past month as states re-open their economies and allow real estate activity to continue. Realogy’s stock had fallen to the low $2 range in March and early April, but has since rebounded to more than $8 per share on June 8.
