What is Aon announcing in this 8-K filing?

Aon is furnishing a press release on the early results of cash tender offers and consent solicitations by its subsidiary Randolph Acquisition Corp. for four series of NFP Corp. notes, totaling roughly $3.5 billion in principal. It also reports the reference yields used to price the fixed-spread notes. The disclosure is linked to Aon's pending acquisition of NFP.

Are the tender offers a sign that the NFP acquisition will close?

Not directly. The tender offers are conditioned on the NFP merger closing, so the high tender rates show creditor support for the transaction, but they do not guarantee that the merger will close. The merger remains subject to regulatory approvals and other conditions described in the forward-looking statements.

What do holders receive for tendering their notes?

Holders who tender at or before the April 15, 2024 early deadline receive the total consideration, which includes a $30 per $1,000 early tender payment. Fixed-price notes receive $1,020 (2028 unsecured) and $1,005 (2028 secured) per $1,000. Fixed-spread notes receive the Treasury reference yield plus 50 bps, expressed as a price per $1,000. Holders who tender after the early deadline but before April 30, 2024 receive only the tender consideration, which is the total consideration less the early payment. All holders also receive accrued interest up to the settlement date.

What do the consent solicitations change for Aon and NFP's debt?

The proposed amendments would remove or modify most restrictive covenants, certain reporting obligations, and certain events of default, and would shorten the notice period for optional redemptions. For the secured notes, a separate amendment would release all collateral securing the obligations. Consents from holders of a majority of the unsecured and secured notes were obtained, and over 66⅔% of the secured notes consented to the collateral release. The amendments take effect on the early or final settlement date.

When will the tender offers settle?

If the NFP merger closes on or before April 26, 2024, Randolph intends to use the business day after closing as the early settlement date. Otherwise, the anticipated final settlement date is May 2, 2024, the second business day after the April 30, 2024 expiration. If the merger closes after May 2, 2024, pricing will be calculated as if final settlement occurred on May 2, 2024.

AON 8-K: Regulation FD — Apr 16, 2024

01—Abstract

Summary

Summary of the 8-K filed April 16, 2024. Cited figures are marked; the original filing is the authoritative source.

Aon plc (NYSE: AON) disclosed on April 16, 2024 (press release dated April 15, 2024) the early results of cash tender offers and consent solicitations by its subsidiary Randolph Acquisition Corp. for outstanding debt of NFP Corp., the target business being acquired through the pending NFP acquisition.

Holders tendered a large majority of the notes by the April 15 early tender deadline: 98.36% of the 6.875% Senior Notes due 2028 ($2.04 billion^a of $2.075 billion), 91.66% of the 4.875% Senior Secured Notes due 2028 (about $504 million of $550 million), 93.92% of the 7.500% Senior Secured Notes due 2030 (about $329 million of $350 million), and 99.27% of the 8.500% Senior Secured Notes due 2031 (about $347 million of $350 million). Consent solicitations also received the required majorities to amend the indentures. For the Secured Notes, consents exceeded 66⅔%, enabling the release of collateral securing the obligations.

The tender offers are contingent on the closing of the NFP acquisition, which Aon agreed to in December 2023. Early tenderers receive a total consideration that includes a $30^b per $1,000 early tender payment, with fixed-price notes priced at $1,020 and $1,005 per $1,000 principal, and fixed-spread notes priced at a Treasury reference yield plus a 50 bps spread. The final expiration is April 30, 2024, with an expected final settlement date of May 2, 2024.

Settlement of the early tender is possible if the merger closes first, and if the merger closes on or before April 26, 2024, the early settlement date will be the business day after closing. Because the merger closing is not conditioned on the tender offers, Aon controls the timing of the process. For investors, the filing is primarily a refinancing and deal-execution update rather than a change in Aon's operating results.

The high tender rates indicate strong creditor support and show that Aon is positioned to retire NFP's high-coupon debt and remove restrictive covenants after the acquisition. The main outstanding uncertainty is whether the NFP acquisition closes on schedule, since it remains subject to regulatory approvals and other conditions described in the forward-looking statements section.

02—Key points

Key Highlights

Early tender results show strong creditor support: 98.36% of the 6.875% 2028 Unsecured Notes, 99.27% of the 8.500% 2031 Secured Notes, 93.92% of the 7.500% 2030 Secured Notes, and 91.66% of the 4.875% 2028 Secured Notes were validly tendered as of the April 15, 2024 early tender deadline.
Consent solicitations passed for all four series, with majorities for the unsecured and secured notes and over 66⅔% for the secured notes, which allows the release of collateral and removal of most restrictive covenants.
Early tender payment of $30 per $1,000 principal amount is included in total consideration, which is $1,020 for the 2028 unsecured notes and $1,005 for the 2028 secured notes. Fixed-spread notes are priced at the Treasury reference yield plus 50 bps.
Reference yields were set at 5.083% (5.000% UST due 2025) for the 2030 Secured Notes and 4.856% (1.625% UST due 2026) for the 2031 Secured Notes, implying repurchase yields of 5.583% and 5.356%.
Tender offers are conditioned on the closing of Aon's acquisition of NFP Intermediate Holdings A Corp. under the December 19, 2023 merger agreement, but the merger is not conditioned on the tender offers.
Final expiration is April 30, 2024, with an expected final settlement date of May 2, 2024. An early settlement date is possible if the merger closes on or before April 26, 2024.
The filing itself contains no new financial results or guidance; it is a Regulation FD disclosure furnishing the press release, and forward-looking risks are tied to the NFP deal.

03—Questions

Frequently Asked Questions

What is Aon announcing in this 8-K filing?
Aon is furnishing a press release on the early results of cash tender offers and consent solicitations by its subsidiary Randolph Acquisition Corp. for four series of NFP Corp. notes, totaling roughly $3.5 billion in principal. It also reports the reference yields used to price the fixed-spread notes. The disclosure is linked to Aon's pending acquisition of NFP.
Are the tender offers a sign that the NFP acquisition will close?
Not directly. The tender offers are conditioned on the NFP merger closing, so the high tender rates show creditor support for the transaction, but they do not guarantee that the merger will close. The merger remains subject to regulatory approvals and other conditions described in the forward-looking statements.
What do holders receive for tendering their notes?
Holders who tender at or before the April 15, 2024 early deadline receive the total consideration, which includes a $30 per $1,000 early tender payment. Fixed-price notes receive $1,020 (2028 unsecured) and $1,005 (2028 secured) per $1,000. Fixed-spread notes receive the Treasury reference yield plus 50 bps, expressed as a price per $1,000. Holders who tender after the early deadline but before April 30, 2024 receive only the tender consideration, which is the total consideration less the early payment. All holders also receive accrued interest up to the settlement date.
What do the consent solicitations change for Aon and NFP's debt?
The proposed amendments would remove or modify most restrictive covenants, certain reporting obligations, and certain events of default, and would shorten the notice period for optional redemptions. For the secured notes, a separate amendment would release all collateral securing the obligations. Consents from holders of a majority of the unsecured and secured notes were obtained, and over 66⅔% of the secured notes consented to the collateral release. The amendments take effect on the early or final settlement date.
When will the tender offers settle?
If the NFP merger closes on or before April 26, 2024, Randolph intends to use the business day after closing as the early settlement date. Otherwise, the anticipated final settlement date is May 2, 2024, the second business day after the April 30, 2024 expiration. If the merger closes after May 2, 2024, pricing will be calculated as if final settlement occurred on May 2, 2024.

04—Continue

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