public info
yesterday resideo file a SEC form 3 and a form 4, both are available on resideo's investor page as well from sec.gov. copy and paste them into chatgpt or whatever AI and it'll tell you what it's about. here are some highlights:
- the form 3 states that CD&R owns 18,573,551 shares of series A preferred stock, convertible to common stock at price of $26.92.
- the form 3 also stated that CD&R had a put option on resideo, something that was "inadvertently" omitted from the original filing.
- the series A preferred stock accrues a 7% annual dividend, and can go up to 10% if there's a missed payment.
- form 4 states the CD&R converted 1,500 shares of the preferred stock to 55,721 shares at $26.92 per share. that equals $1.5m
- form 4 states that CD&R sold 1500 shares of the preferred stock to someone at $1000 per share. that also equals $1.5m
some thoughts, analysis, opinion:
- CD&R owns roughly 18.5m shares of resideo, that should be second to blackrock.
- 18.5m shares at $26.92 is $500m, which is what resideo "borrowed" from CD&R to buy snap one.
- 7% interest on $500m is $35m a year
- and remember resideo sold $600m worth of senior notes at 6.5% interest, which is $39m.
- so in total resideo borrowed $1.1b to finance the purchase of snap one (an unprofitable company since going public), paying interest of $74m a year. this is on top of the $130m a year (for total of 30 years) resideo is still paying honeywell for the indemnification clause. so a total of $204m a year paying interests and "penalties".
- in the original filing of the snap one deal, CD&R got the right to sell up to 24.5m shares. 24.5m minus 18.5m is 6m, and at 26.92 a share, that's roughly over $160m profit they'll be making on this deal, plus whatever they get from the 7% interest. plus the two board seats. pretty sweet deal.
- they're claiming the put option was left out. questionable at best. anyone reading between the lines should be able to tell this "consultant" was getting paid $1.5m for his services. shouldn't be a surprise that there may be more of these.
$204m a year, how many headcounts is that? even at $100k salary per person, that's over 2000 jobs. each time there's a rif, is anyone asking if resideo could be saving jobs (or livelihood for that matter) if it didn't have to pay all that interest or penalty? CD&R is or will be walking away with hundreds of millions of dollars, but some hard working people who've been with honeywell/resideo for a long time will be losing their jobs because resideo is still head stuck in its a-s about margins.
when will resideo figure out investments should be made in people and not deals with private equity firms? that its obligation is to the hard working people and not greedy wall street "shareholders"?