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AMAZON COM INC 8-K Report, Agreement Terminated (Aug 22, 2017)

Filed August 22, 2017For Securities:AMZN

Summary

This 8-K filing by Amazon.com, Inc. (AMZN) on August 22, 2017, primarily details the termination of a significant bridge loan commitment and the issuance of substantial new debt. Specifically, Amazon terminated its $13.7 billion 364-day senior unsecured bridge term loan facility, which was initially intended to fund the acquisition of Whole Foods Market. This termination was a direct result of Amazon successfully raising equivalent capital through the issuance of a diverse range of senior notes. The company issued approximately $15 billion in new notes across various maturities (2020, 2023, 2024, 2027, 2037, 2047, and 2057) with coupon rates ranging from 1.900% to 4.250%. The net proceeds from this note offering are earmarked for the Whole Foods acquisition, repayment of existing debt (specifically the 1.200% notes due 2017), and general corporate purposes. This strategic debt issuance effectively replaced a short-term financing facility with longer-term debt, providing Amazon with financial flexibility and a clear funding path for its strategic acquisition.

Key Highlights

  • 1Termination of a $13.7 billion 364-day senior unsecured bridge term loan facility, initially intended for the Whole Foods acquisition.
  • 2Successful issuance of approximately $15 billion in new senior notes across seven different maturities.
  • 3Notes issued include 1.900% due 2020, 2.400% due 2023, 2.800% due 2024, 3.150% due 2027, 3.875% due 2037, 4.050% due 2047, and 4.250% due 2057.
  • 4Net proceeds from the note issuance will fund the Whole Foods Market merger consideration.
  • 5A portion of the proceeds will be used to repay Amazon's 1.200% notes due 2017.
  • 6The notes were offered to qualified institutional buyers under Rule 144A and to non-U.S. persons under Regulation S, and were not registered under the Securities Act.
  • 7A Registration Rights Agreement was entered into, obligating Amazon to file an exchange offer registration statement for the notes.

Frequently Asked Questions

Amazon terminated the bridge loan because it successfully raised the necessary capital through the issuance of approximately $15 billion in new senior notes. This allowed the company to replace the short-term financing with longer-term debt.

The net proceeds from the note issuance will be used to fund the consideration for the acquisition of Whole Foods Market, to repay Amazon's 1.200% notes due 2017, and for general corporate purposes.

No, the notes were not registered under the Securities Act of 1933. They were offered only to 'qualified institutional buyers' under Rule 144A of the Securities Act or to persons outside the United States in compliance with Regulation S. Amazon has entered into a Registration Rights Agreement requiring it to register the notes later.

If the Whole Foods merger does not close by a specified date (early 2018, with potential extension), the 2020, 2023, 2024, and 2027 notes will be redeemed at 101% of their principal amount plus accrued interest. The longer-term 2037, 2047, and 2057 notes are not subject to this special redemption.