Terminix Now a Pure-Play Global Pest Control
Leader
- ServiceMaster Global Holdings changes name to Terminix Global
Holdings, to begin trading under NYSE ticker ‘TMX’ effective
October 5, 2020
- Terminix to retire over $800 million in debt
- Terminix Board of Directors authorizes three-year, $400 million
share repurchase program
ServiceMaster Global Holdings, Inc. (NYSE: SERV), a leading
provider of essential services to residential and commercial
customers, today announced that it has completed the sale of its
ServiceMaster Brands franchise businesses to an affiliate of
investment funds managed by Roark Capital Management LLC for $1.553
billion.
With the completion of the sale, the Company is changing its
name to Terminix Global Holdings, Inc., and its stock will begin
trading Monday, October 5, 2020 under the NYSE ticker symbol ‘TMX’.
The transaction better positions both Terminix and ServiceMaster
Brands to pursue their own distinct growth strategies.
“Today marks the beginning of exciting new chapters for both
Terminix and ServiceMaster Brands,” said CEO Brett Ponton.
“Terminix is moving ahead with a laser focus on being the preferred
pest control company in the industry. We look forward to continuing
to build on the progress underway to further enhance the customer
experience that will drive consistent, profitable growth. We see
tremendous potential to further capitalize on the powerful Terminix
brand name, strong service culture, and significant scale to
deliver greater value for all our stakeholders. Our talented team
is energized and looks forward to forging even stronger connections
with our customers and local communities.”
“With Roark Capital, the team at ServiceMaster Brands will have
access to new opportunities to build upon their exceptional
portfolio and trusted brand names, and we know they are destined to
continue to achieve great things. We thank the team for their hard
work in getting to this point, and we wish them well for the
future,” Ponton concluded.
ServiceMaster CFO Tony DiLucente added, “The transaction will
deliver substantial financial benefits, allowing us to right-size
our balance sheet below our long-term target net debt ratio of 2.5
to 3 times. Increasing the focus on consistent execution in the
Terminix business as a pure-play company will allow us to make
faster progress improving the fundamentals of customer service.
Those improvements will drive higher customer retention and produce
consistent organic growth, profit margin expansion and free cash
flow generation. In addition, while we will have ample capacity to
pursue strategic M&A opportunities, our focus in the near term
will be on bolt-on deals as we work to realize synergies from
previous deals closed over the last few years. Under our new $400
million share repurchase authorization, we will have considerable
flexibility to be opportunistic as we remain focused on delivering
returns for our shareholders.”
Use of Proceeds
After taxes and fees related to the sale, net proceeds of
approximately $1.1 billion will be used to retire approximately
$800 million of debt, including a portion of the Term Loan B and
all of the existing 2024 high yield bonds. Excess cash to the
balance sheet of approximately $300 million will be earmarked for
accretive M&A opportunities as well as opportunistic
shareholder returns under a new $400 million share repurchase
authorization.
Credit Agreement Amendment and Payment
On September 30, 2020, the Company closed an amendment to its
existing credit agreement that permits proceeds from the sale of
ServiceMaster Brands to be used to retire subordinated debt or pay
shareholder returns. In conjunction with the amendment, the Company
made an approximately $51 million advance amortization payment on
the Term Loan B, set to mature in November of 2026. There were no
additional material changes to the terms of the Term Loan B and
there was no extension of the maturity date.
Retirement of 2024 High Yield Bonds
The Company intends to retire all $750 million of its existing
5.125% high yield bonds on November 15, 2020. In conjunction with
the retirement, the Company will pay a prepayment penalty of
2.563%.
Share Repurchase Authorization
Upon closing of the ServiceMaster Brands sale, the ServiceMaster
Board of Directors authorized a three-year $400 million share
repurchase program. Under the share repurchase program, the Company
may repurchase shares in accordance with applicable securities laws
and regulations, including Rule 10b-18 of the Securities Exchange
Act of 1934, as amended. The extent to which the Company
repurchases its shares, and the timing and manner of such
repurchases, will depend upon a variety of factors, including
market conditions, regulatory requirements and other corporate
considerations, as determined by the Company. The repurchase
program may be suspended or discontinued at any time. The Company
expects to fund the purchases from proceeds of the ServiceMaster
Brands sale and ongoing operating cash flow.
Name and NYSE Ticker Change
The Company’s name will change from ServiceMaster Global
Holdings Inc., to Terminix Global Holdings, Inc., and its common
stock will begin trading under the NYSE ticker symbol ‘TMX’ on
October 5, 2020. In conjunction with the name and NYSE ticker
change, the associated CUSIP number will change to 88087E100.
About Terminix
Terminix Global Holdings (NYSE: TMX) is a leading provider of
residential and commercial pest control. The Company provides pest
management services and protection against termites, mosquitoes,
rodents and other pests. Headquartered in Memphis, Tenn., with more
than 10,500 teammates and 2.8 million customers in 24 countries and
territories, the Company visits more than 50,000 homes and business
every day. To learn more about Terminix, visit Terminix.com, or
LinkedIn.com/company/terminix.
Information Regarding Forward-Looking Statements
This press release contains forward-looking statements and
cautionary statements. Forward-looking statements can be identified
by the use of forward-looking terms such as “believes,” “expects,”
“may,” “will,” “shall,” “should,” “would,” “could,” “seeks,”
“aims,” “projects,” “is optimistic,” “intends,” “plans,”
“estimates,” “anticipates” or other comparable terms.
Forward-looking statements are subject to known and unknown risks
and uncertainties, many of which may be beyond our control,
including, without limitation, the risks and uncertainties
discussed in the “Risk Factors” and “Information Regarding
Forward-Looking Statements” sections in the Company’s reports filed
with the U.S. Securities and Exchange Commission. Such risks,
uncertainties and changes in circumstances include, but are not
limited to: the share repurchase program may be suspended or
discontinued; the impact of reserves attributable to pending
Litigated and Non-Litigated Claims for terminate damages; the
impact of COVID-19 on our operations; lawsuits, enforcement actions
and other claims by third parties or governmental authorities;
compliance with, or violation of environmental health and safety
laws and regulations; weakening general economic conditions;
weather conditions and seasonality; the success of our business
strategies, and costs associated with restructuring initiatives. We
caution you that forward-looking statements are not guarantees of
future performance or outcomes and that actual performance and
outcomes, including, without limitation, our actual results of
operations, financial condition and liquidity, and the development
of the market segments in which we operate, may differ materially
from those made in or suggested by the forward-looking statements
contained in this press release. The Company assumes no obligation
to update the information contained herein, which speaks only as of
the date hereof.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201001005665/en/
Investor Relations: Jesse Jenkins 901.597.8259
Jesse.Jenkins@servicemaster.com
Media: James Robinson 901.597.7521
James.Robinson@servicemaster.com
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