8-KFinancial EventsExhibits & Filings

BECTON DICKINSON & CO 8-K Report, Financial Obligation (Dec 9, 2016)

Filed December 9, 2016For Securities:BDX

Summary

Becton, Dickinson and Company (BDX) announced the issuance of €1 billion in aggregate principal amount of new notes, split between €500 million of 1.000% notes due December 15, 2022, and €500 million of 1.900% notes due December 15, 2026. These notes were issued in an underwritten public offering and an application will be made to list them on the New York Stock Exchange. The company has outlined redemption provisions for both note series, including options to redeem at certain times or under specific circumstances, such as a change in U.S. tax laws. Furthermore, the issuance includes provisions for noteholders to require the company to repurchase their notes at 101% of the principal amount in the event of a "Change of Control Triggering Event." The indenture also specifies events of default and potential acceleration of principal repayment, along with covenants related to mergers or asset sales. This filing primarily details the terms and conditions of this new debt financing.

Key Highlights

  • 1BDX issued €1 billion in new debt: €500 million of 1.000% notes due 2022 and €500 million of 1.900% notes due 2026.
  • 2The notes are part of an underwritten public offering and will be listed on the NYSE.
  • 3The company retains the option to redeem the notes early under specific conditions, including at a premium to principal amount before maturity.
  • 4A 'Change of Control Triggering Event' allows noteholders to sell their notes back to BDX at 101% of the principal amount.
  • 5The issuance is governed by an indenture with standard provisions for interest and principal payment defaults.
  • 6Events of default include failure to pay interest or principal, breaches of covenants, and bankruptcy proceedings.
  • 7The indenture includes covenants that would apply in the event of a merger or significant asset sale by BDX.

Frequently Asked Questions

The filing does not explicitly state the purpose of the debt issuance. However, it is common for companies to issue debt for general corporate purposes, to fund acquisitions, to refinance existing debt, or to manage their capital structure. Investors should look for further disclosures in subsequent filings for a clearer understanding of the use of proceeds.

Key risks include interest rate risk (if rates rise, the fixed rate on these notes becomes less attractive), credit risk (the risk of BDX defaulting on payments), and redemption risk (BDX can redeem the notes early, potentially forcing investors to reinvest at lower rates). Additionally, a change of control event offers protection to noteholders but signals a significant corporate event that could have other implications.

A Change of Control Triggering Event is defined within the notes' indenture. If such an event occurs, it grants bondholders the right to sell their notes back to BDX at 101% of the principal amount, plus accrued interest. This provision is designed to protect bondholders from potential risks associated with a significant change in the company's ownership or control.

BDX has the option to redeem the notes prior to their maturity dates. This means that if market interest rates fall, BDX may choose to redeem these higher-coupon notes and refinance at a lower rate. For investors, this presents reinvestment risk, as they would receive their principal back sooner than expected and would need to reinvest it, potentially at a lower prevailing interest rate.