Dell Technologies issues $1.5 billion in senior notes

In a recent move to bolster its financial structure, Dell Technologies Inc. (NYSE:DELL) has announced the issuance of $1.5 billion in senior notes. The offering, completed today, involved two tranches: $700 million of 4.350% notes due 2030 and $800 million of 4.850% notes due 2035.

The notes, which are unsecured and rank equally with other senior indebtedness, were issued by Dell's subsidiaries, Dell International L.L.C. and EMC Corporation (NYSE:EMC_old). These obligations are guaranteed jointly by Dell Technologies and its wholly-owned subsidiaries, Denali Intermediate Inc. and Dell Inc .

Interest on both series of notes will accrue from today and is payable semi-annually, with the first payment due on February 1, 2025. The 2030 notes will mature on February 1, 2030, while the 2035 notes have a maturity date of February 1, 2035.

Dell Technologies has the option to redeem the notes before their respective maturity dates at a make-whole premium. Post specific dates close to maturity – January 1, 2030, for the 2030 notes and November 1, 2034, for the 2035 notes – the company can redeem the notes at par plus accrued interest.

The notes come with protective covenants that limit the company's ability to secure debt with certain assets, undergo certain types of mergers and sales, and enter into sale and leaseback transactions.

In the event of a change of control triggering event, note holders have the option to require Dell to repurchase their notes at 101% of the principal amount plus accrued interest.

In other recent news, Dell Technologies has issued $1.5 billion in senior notes as part of its strategy to manage its debt profile. Concurrently, the company has seen significant growth in its core businesses and has expanded its presence in the artificial intelligence (AI) market, with a reported $3.8 billion backlog. Dell has also mandated a full office work week for its global sales team, launched Dell AI for Telecom to assist in deploying AI technologies more efficiently, and rejoined the S&P 500 Index.

Furthermore, Dell has issued 26.5 million Class C common shares to its founder and CEO, Michael Dell. Analysts' outlooks on Dell's prospects vary, with Mizuho initiating coverage with an Outperform rating, while Susquehanna issued a Neutral rating due to concerns about the uncertain economic returns of AI hardware.

Evercore ISI maintained a positive outlook, reiterating an Outperform rating despite expected gross margin headwinds from a greater mix of AI servers and inflationary component costs. These are the recent developments regarding Dell Technologies.

InvestingPro Insights

Dell Technologies' recent $1.5 billion senior notes issuance aligns with the company's proactive financial management strategy. According to InvestingPro data, Dell boasts a substantial market capitalization of $85.29 billion, underscoring its significant presence in the Technology Hardware, Storage & Peripherals industry. The company's revenue stands at an impressive $91.84 billion for the last twelve months, reflecting its robust market position.

InvestingPro Tips highlight Dell's aggressive share buyback program and high shareholder yield, indicating a strong commitment to returning value to shareholders. This approach, coupled with the company's dividend growth - having raised dividends for three consecutive years - suggests a balanced strategy of reinvestment and shareholder returns.

The company's P/E ratio of 21.74 and forward P/E of 18.89 indicate that investors are willing to pay a premium for Dell's earnings, possibly due to its strong market position and growth prospects. This valuation is further supported by Dell's profitability over the last twelve months and analysts' predictions of continued profitability.

For investors seeking more comprehensive insights, InvestingPro offers 12 additional tips on Dell Technologies, providing a deeper understanding of the company's financial health and market position.

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