8-KMaterial AgreementsFinancial EventsOther Events+1

Baker Hughes Co 8-K Report, Material Agreement (Nov 7, 2017)

Filed November 7, 2017For Securities:BKR

Summary

This 8-K filing from Baker Hughes, a GE company (BHGE), details significant agreements and actions related to its capital structure and governance following the merger with GE's Oil & Gas business. Key developments include an equity repurchase agreement with General Electric (GE) designed to facilitate stock buybacks by BHGE and a new commercial paper program established by BHGE LLC, allowing for the issuance of up to $3 billion in unsecured notes for general corporate purposes. These actions suggest a strategic move to manage its capital efficiently and potentially return value to shareholders through share repurchases. The filing also introduces changes to the company's board governance principles, setting a new retirement age for directors.

Key Highlights

  • 1Baker Hughes, a GE company (BHGE) entered into an Equity Repurchase Agreement with General Electric (GE) on November 5, 2017.
  • 2Under the agreement, BHGE LLC will repurchase its common units from GE, with proceeds to BHGE used for repurchasing its Class A shares.
  • 3BHGE's board authorized BHGE LLC to repurchase up to $3 billion of its common units from the Company and GE.
  • 4BHGE LLC established a commercial paper program to issue up to $3 billion in unsecured commercial paper notes for general corporate purposes.
  • 5Proceeds from the unit repurchases by BHGE LLC from GE will be used by BHGE to repurchase Class A shares on the open market or through private negotiations.
  • 6Governance principles were amended to stipulate that directors over 75 years old will not be nominated for re-election, with provisions for special circumstances.

Frequently Asked Questions

The Equity Repurchase Agreement with GE allows BHGE LLC to repurchase its common units from GE. The proceeds BHGE receives from these repurchases will be used by BHGE to buy back its own Class A shares in the open market or through private transactions. This mechanism is intended to manage the company's capital structure and potentially return value to its Class A stockholders.

BHGE LLC has established a commercial paper program allowing it to issue up to $3 billion in unsecured commercial paper notes. The proceeds from these notes are intended for general corporate purposes. This provides BHGE with flexibility in managing its short-term liquidity needs.

The authorized $3 billion repurchase program, facilitated by the agreement with GE and the commercial paper program, aims to reduce the number of outstanding Class A shares. This can potentially increase earnings per share and the overall value for remaining shareholders, assuming the company's performance remains stable or improves.

The company amended its governance principles to require that directors who are over 75 years old will not be nominated for election to the board. This is a change from the previous policy which had a different age threshold and specific conditions for older directors.