Summary
Arthur J. Gallagher & Co. (AJG) filed an 8-K on March 3, 2014, to report the closing of a private placement of $600 million in unsecured senior notes. This issuance consisted of three series: $325 million of 4.58% notes due 2024, $175 million of 4.73% notes due 2026, and $100 million of 4.98% notes due 2029. The proceeds from this offering are expected to fund prior commitments and provide general corporate purposes. This move indicates the company's strategy to secure long-term financing at specific interest rates. The notes are senior unsecured obligations, ranking equally with existing senior unsecured indebtedness. The agreement includes standard covenants requiring AJG to maintain specified financial ratios and outlines customary events of default. Notably, the notes are redeemable with a make-whole amount, and AJG may be obligated to prepay the notes without a premium following a change in control event if the company's credit rating is not investment grade within 90 days.
Key Highlights
- 1Closing of a $600 million private placement of unsecured senior notes on February 27, 2014.
- 2The notes are issued in three series with maturities in 2024, 2026, and 2029, carrying interest rates of 4.58%, 4.73%, and 4.98%, respectively.
- 3The issuance is senior unsecured debt, ranking pari passu with other senior unsecured indebtedness.
- 4The Note Purchase Agreement includes customary covenants regarding financial ratios and events of default.
- 5Notes are redeemable at 100% of principal plus accrued interest and a make-whole amount.
- 6A change in control provision obligates AJG to offer prepayment without a premium if an investment grade rating is not maintained within 90 days post-event.