Summary
Aon Corporation (AON) filed an 8-K on May 27, 2011, reporting on the execution of an Underwriting Agreement on May 24, 2011, for the issuance of $500 million in 3.125% Senior Notes due 2016. The net proceeds are expected to be approximately $496 million, intended for the repayment of a portion of the company's existing $1 billion term credit facility. This move indicates a strategic refinancing effort aimed at managing debt obligations and potentially lowering interest costs given the variable rate on the existing facility.
Key Highlights
- 1Aon priced a $500 million offering of 3.125% Senior Notes due 2016.
- 2The offering was conducted under the company's effective shelf registration statement on Form S-3.
- 3Net proceeds are estimated at approximately $496 million after deducting underwriting discounts and expenses.
- 4The primary use of proceeds is to repay a portion of Aon's existing $1 billion term credit agreement.
- 5The existing credit facility bears interest at LIBOR plus 250 basis points and matures in October 2013.
- 6The company issued a press release on May 24, 2011, to announce the note offering.
Frequently Asked Questions
This Form 8-K reports on Aon Corporation's entry into an Underwriting Agreement to issue $500 million of 3.125% Senior Notes due 2016. The filing details the terms of the offering and the intended use of the proceeds.
Aon raised $500 million in principal amount of senior notes. The net proceeds, estimated at approximately $496 million, will be used to repay a portion of its outstanding $1 billion term credit agreement.
The new notes are 3.125% Senior Notes due 2016, meaning they carry a fixed annual interest rate of 3.125% and mature in 2016.
The existing term credit facility has a variable interest rate (LIBOR plus 250 basis points) and matures in October 2013. By issuing fixed-rate notes, Aon is likely aiming to manage its debt structure, potentially lock in interest costs, and address upcoming maturity obligations.