Summary
Arthur J. Gallagher & Co. (AJG) announced the issuance of $700 million in aggregate principal amount of unsecured senior notes on June 24, 2014, through a private placement. These notes are divided into six series with varying interest rates and maturity dates, ranging from 2018 to 2026. The issuance was conducted under a Note Purchase Agreement with accredited institutional investors and includes guarantees from certain subsidiaries. The proceeds from this debt offering will likely be used for general corporate purposes, potentially including acquisitions or refinancing existing debt, which is a common strategy for growth-oriented companies like AJG. Investors should note that the notes are unsecured and rank equally with other senior unsecured indebtedness. The agreement includes covenants requiring AJG to maintain specific financial ratios and standard provisions for events of default. Importantly, the notes are redeemable, and a change in control event within 90 days without an investment grade rating triggers an obligation for AJG to offer to prepay the notes.
Key Highlights
- 1AJG issued $700 million in unsecured senior notes in a private placement on June 24, 2014.
- 2The notes are comprised of six series with maturities between 2018 and 2026, and interest rates ranging from 2.80% to 4.36%.
- 3The issuance was made under a Note Purchase Agreement with accredited institutional investors.
- 4Certain AJG subsidiaries provided guarantees for the notes.
- 5The notes are senior unsecured obligations, ranking equally with other senior unsecured debt.
- 6The Note Purchase Agreement includes financial ratio covenants and standard events of default.
- 7A change in control event without an investment grade rating within 90 days requires AJG to offer to prepay the notes.