8-KMaterial AgreementsExhibits & Filings

AGILENT TECHNOLOGIES, INC. 8-K Report, Material Agreement (Jul 2, 2008)

Filed July 2, 2008For Securities:A

Summary

Agilent Technologies, Inc. (Agilent) filed an 8-K on July 2, 2008, reporting amendments to a material definitive agreement concerning a repurchase transaction. The core of the filing relates to a Master Repurchase Agreement, originally entered into in January 2006, involving Agilent's subsidiary World Trade selling preferred shares of its subsidiary Agilent Technologies (Cayco) Limited to a counterparty. This agreement has seen several amendments and counterparty substitutions, most recently on June 27, 2008. The primary impact for investors in this filing is the extension of the repurchase date for $1.5 billion in preferred shares. The original repurchase obligation, accelerated by Merrill Lynch Capital Services, Inc. to July 16, 2008, has now been extended to November 17, 2008. Additionally, Agilent's subsidiary has gained the right to accelerate the repurchase date to September 19, 2008, under specific conditions. The interest rate on the quarterly payments under the agreement has also been adjusted.

Key Highlights

  • 1Agilent Technologies, Inc. amended its Master Repurchase Agreement for a $1.5 billion transaction involving preferred shares of a subsidiary.
  • 2The repurchase obligation date for $1.5 billion in preferred shares has been extended from July 16, 2008, to November 17, 2008.
  • 3Agilent's subsidiary, World Trade, now has the option to accelerate the repurchase date to September 19, 2008, with notice by August 14, 2008.
  • 4The counterparty to the repurchase agreement was substituted on June 27, 2008, to Steers Repo Pass-Thru Trust, 2008-1.
  • 5The quarterly payment rate under the agreement has been adjusted, with an increase in the spread over LIBOR from 52 basis points to 235 basis points after July 16, 2008.
  • 6Agilent Technologies, Inc. has provided an unconditional guarantee for its subsidiary's repurchase obligations.

Frequently Asked Questions

The main financial impact is the extension of a significant repurchase obligation by nearly four months, from July 16, 2008, to November 17, 2008. This provides Agilent with more time to manage its liquidity and potentially its strategic options regarding the $1.5 billion in preferred shares.

The cost of this financing arrangement has increased. For the period after July 16, 2008, the spread over the three-month LIBOR rate has risen significantly from 52 basis points to 235 basis points.

The filing indicates that counterparty substitutions have occurred at the request of Merrill Lynch Capital Services, Inc. This suggests that Merrill Lynch has been instrumental in arranging and managing this financing structure, likely through securitization or other financial instruments, leading to the transfer of the counterparty role to different entities.

While World Trade (a wholly-owned subsidiary of Agilent) sold these preferred shares to the counterparty, the transaction is structured as a repurchase agreement. Agilent continues to receive dividends and distributions on these shares, and it retains an obligation to repurchase them. The underlying ownership structure of Agilent Technologies (Cayco) Limited and its assets remains distinct from Agilent and its other subsidiaries.