Summary
Aflac Incorporated (AFL) filed an 8-K on June 7, 2013, to report on a material definitive agreement. Specifically, on June 3, 2013, the company entered into an underwriting agreement for the issuance and sale of $700 million aggregate principal amount of 3.625% Senior Notes due 2023. These notes were offered under a shelf registration statement previously filed with the SEC. In conjunction with this debt offering, Aflac also entered into cross-currency swaps to convert the U.S. dollar liability into Japanese Yen and reduce the effective interest rate. The company intends to use the net proceeds primarily to repay or redeem existing debt, including both U.S. dollar and Yen-denominated notes maturing in 2014 and 2015. A portion of the proceeds may also be used for general corporate purposes and potential capital contributions to subsidiaries.
Key Highlights
- 1Aflac issued $700 million in 3.625% Senior Notes due 2023.
- 2The issuance was conducted under a Form S-3 shelf registration statement.
- 3Cross-currency swaps were utilized to convert the USD debt to JPY and reduce interest costs.
- 4The effective interest rate on the yen-denominated debt is 1.50%.
- 5Proceeds will be used to repay or redeem existing notes maturing in 2014 and 2015, including ¥28.7 billion of 1.47% Samurai notes and $300 million of 3.45% senior notes.
- 6The remaining proceeds are allocated for general corporate purposes and potential capital contributions to subsidiaries.