Summary
Aon plc (AON) filed an 8-K report on November 19, 2010, to announce the termination of a material definitive agreement. Specifically, the company has elected to prepay all outstanding senior unsecured notes issued under a Note Purchase Agreement dated August 21, 2008. These notes, totaling $230 million ($175 million Series F and $55 million Series G), were assumed by Aon following its merger with Hewitt Associates, Inc., which closed on October 1, 2010. This prepayment is a strategic financial decision by Aon. While the company will incur significant make-whole premium costs (estimated at approximately $52.2 million combined for Series F and G notes) along with accrued interest, the action signifies Aon's proactive management of its debt obligations post-merger. Investors should view this as a move to simplify the capital structure and potentially reduce future interest expenses, although the immediate cost is substantial.
Key Highlights
- 1Aon plc is prepaying its $230 million in senior unsecured notes due August 21, 2015 (Series F) and August 21, 2018 (Series G).
- 2The prepayment is scheduled for December 20, 2010.
- 3These notes were originally issued by Hewitt Associates L.L.C. and assumed by Aon as part of the merger with Hewitt Associates, Inc.
- 4The prepayment will include the principal amount, accrued interest, and a 'make-whole' premium.
- 5The estimated make-whole premium is approximately $36.7 million for Series F notes and $15.5 million for Series G notes.
- 6Accrued interest through the prepayment date is estimated at approximately $3.8 million for Series F and $1.3 million for Series G notes.
- 7This action aims to terminate a material definitive agreement and streamline Aon's debt structure post-merger.