8-KFinancial EventsExhibits & Filings

CHURCH & DWIGHT CO INC /DE/ 8-K Report, Financial Obligation (Sep 26, 2012)

Filed September 26, 2012For Securities:CHD

Summary

On September 26, 2012, Church & Dwight Co., Inc. (CHD) announced the closing of a $400 million offering of 2.875% Senior Notes due 2022. These notes were issued to partially finance the acquisition of Avid Health, Inc. The offering involves a senior unsecured debt instrument with semi-annual interest payments and a maturity date of October 1, 2022. The company retains the option to redeem the notes under specific conditions, including a change of control event or if the acquisition is not completed by March 31, 2013, in which case a special mandatory redemption at 101% of par may be required. The issuance of these notes represents a significant financial undertaking to support strategic growth through acquisition. Investors should note the terms regarding potential redemption and repurchase obligations, as well as the senior unsecured nature of the debt, which is effectively subordinated to secured debt and structurally subordinated to subsidiary obligations. The indenture includes covenants that restrict certain corporate actions like liens and asset disposals, subject to standard exceptions. The company also committed to having its subsidiaries guarantee the notes.

Key Highlights

  • 1Church & Dwight closed a $400 million public offering of 2.875% Senior Notes due October 1, 2022.
  • 2The notes were issued to partially fund the acquisition of Avid Health, Inc.
  • 3Interest payments are scheduled semi-annually on April 1 and October 1, starting April 1, 2013.
  • 4The company can redeem notes prior to maturity at a price based on the Treasury Rate plus 20 basis points.
  • 5A Change of Control event could trigger a required repurchase of notes at 101% of par if they are subsequently rated below investment grade.
  • 6Failure to complete the Avid Health acquisition by March 31, 2013, will require a special mandatory redemption of all notes at 101% of principal plus accrued interest.
  • 7The notes are senior unsecured obligations, ranking equally with other senior unsecured debt but subordinated to secured debt and subsidiary obligations.

Frequently Asked Questions

The $400 million in Senior Notes due 2022 was issued to partially finance the previously announced acquisition of Avid Health, Inc. This indicates a strategic move by Church & Dwight to expand its operations through an acquisition.

The notes bear a 2.875% interest rate and mature on October 1, 2022. Interest is paid semi-annually on April 1 and October 1. They are senior unsecured obligations. The company has options to redeem the notes early under specific conditions, including a change of control or if the acquisition doesn't close.

If the acquisition is not completed by March 31, 2013, or the acquisition agreement is terminated before then, Church & Dwight will be required to redeem all of the outstanding notes. This special mandatory redemption would occur at 101% of the principal amount, plus any accrued and unpaid interest.

The 2.875% Senior Notes due 2022 are senior unsecured obligations. This means they rank equally with other existing senior unsecured debt of the company. However, they are effectively subordinated to any secured debt the company may have, as secured debt is backed by collateral. They are also structurally subordinated to the obligations of the company's subsidiaries.