8-KMaterial AgreementsFinancial EventsRegulation FD+1

Arthur J. Gallagher & Co. 8-K Report, Material Agreement (Jul 11, 2012)

Filed July 11, 2012For Securities:AJG

Summary

Arthur J. Gallagher & Co. (AJG) filed an 8-K on July 11, 2012, to report the completion of a private placement of $50 million in 3.99% Series F Senior Notes due July 10, 2020. These notes are senior unsecured obligations, ranking equally with other existing senior unsecured debt of Gallagher and its subsidiary obligors. The issuance was made under a Note Purchase Agreement with accredited institutional investors. The funds raised will likely support general corporate purposes or strategic initiatives, though specific use is not detailed in this filing. Investors should note the covenants requiring AJG to maintain specified financial ratios and the provisions related to a change in control, which could trigger a mandatory prepayment under certain conditions.

Key Highlights

  • 1AJG completed a private placement of $50 million aggregate principal amount of 3.99% Series F Senior Notes due July 10, 2020.
  • 2The Notes are senior unsecured obligations of AJG and certain of its subsidiaries.
  • 3The notes rank equally with all other senior unsecured indebtedness of AJG and its subsidiary obligors.
  • 4The issuance was made under a Note Purchase Agreement with accredited institutional investors.
  • 5The Note Purchase Agreement includes customary representations, warranties, and covenants, including maintenance of specified financial ratios.
  • 6The agreement contains provisions for events of default, including payment defaults, covenant defaults, cross-defaults, and bankruptcy.
  • 7A 'change in control' event, if not accompanied by an investment grade rating within 90 days, triggers an obligation for AJG to offer to prepay the outstanding Notes.

Frequently Asked Questions

The primary purpose of this 8-K filing is to disclose the completion of a material definitive agreement, specifically the issuance of $50 million in Series F Senior Notes due in 2020, and to report a direct financial obligation incurred by the company.

Arthur J. Gallagher & Co. issued $50 million in aggregate principal amount of 3.99% Series F Senior Notes due July 10, 2020. Interest is payable semi-annually on January 10 and July 10, starting January 10, 2013. The notes are senior unsecured obligations.

Yes, the Note Purchase Agreement includes covenants that require AJG to maintain specified financial ratios. Additionally, there's a provision for a mandatory prepayment offer if a 'change in control' occurs and AJG (or its successor) does not maintain an 'investment grade rating' within 90 days following such change.

The new Series F Senior Notes are senior unsecured obligations and rank equally in right of payment with all other existing senior unsecured indebtedness of Arthur J. Gallagher & Co. and its subsidiary obligors.