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HP Moves To Manage Debt Before The Split Into Hewlett Packard Enterprise and HP Inc.

HP wants to retire some debt and help ensure the smooth transition into the two separate businesses.

Hewlett-Packard, in one of its last acts before the company officially splits in two, is looking to retire up to $8.85 billion in debt and sell new senior notes to help manage the settling of financials between the two new companies.

Separately, HP has raised $14.6 billion in the bond market to settle the split, Bloomberg reported Wednesday.

The financial news comes a little over a month before HP splits into two companies -- Hewlett Packard Enterprise, which will include the parts of HP focused on the data center and cloud businesses, and HP Inc., which will consist mainly of the company's PC and printer businesses. The two are scheduled to separate Nov. 1.

[Related: HP Global CIO: Pending HP Split A Lesson In Avoiding Disruption]

In its move to retire up to $8.85 billion in corporate debt before the split, HP on Wednesday said it will make two separate cash tender offers. The first is an offer to purchase up to $2.3 billion of debt based on certain priorities for the securities.

The second is an offer to purchase up to $6.55 billion worth of securities from a separate list of possible securities, with any or all of those securities eligible for purchase.

The company also said Hewlett Packard Enterprise plans to offer senior notes, which it called senior unsecured obligations, with the current HP acting as guarantor for the notes. Once HP splits in two, HP Enterprise will use the funds to purchase some of HP's outstanding senior notes and to repay other indebtedness.

Bloomberg reported that HP raised $14.6 billion from the bond market this week to provide cash to redeem $8.85 billion of the company's debt and finance other obligations. The goal is to provide HP Inc. with the ability to weather a possible downturn in the PC business.

HP spokespeople did not respond to requests from CRN for more clarification on the financial moves.

Everything about the coming split that touches the channel appears to be going smoothly, said Rich Baldwin, chief information officer and chief strategy officer at Nth Generation Computing, a San Diego-based solution provider and longtime HP channel partner.

"We're feeling pretty good about the split," Baldwin told CRN. "They've done a lot of amazing things to get ready. The two companies' emails are already split, and the partner portals, while tied, are already separate."

There are still a couple of minor glitches in the split, Baldwin said.

HP is suffering from a parts shortage for its server business, which seems unrelated to the coming split itself. And HP has not yet been able to offer a simplified single pricing system for all the various parts of its businesses.

However, Baldwin said, there is pressure in the field to make the last fiscal quarter before the split and the first fiscal quarter after the split good ones.

"HP wants to show the split is a good thing, and is putting pressure on the field organizations," he said. "It makes sense. HP needs to show Wall Street that these are two successful companies."

PUBLISHED SEPT. 30, 2015

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