8-KMaterial AgreementsExhibits & Filings

CISCO SYSTEMS, INC. 8-K Report, Material Agreement (Jun 12, 2015)

Filed June 12, 2015For Securities:CSCO

Summary

Cisco Systems, Inc. (CSCO) filed an 8-K on June 11, 2015, to report the entry into a material definitive agreement concerning a public offering of senior notes. The company entered into an underwriting agreement with several major financial institutions to offer and sell new debt securities, expected to close on June 17, 2015. This issuance is a significant event for investors as it outlines Cisco's strategy for raising capital through debt financing. The offering involves a total of $5.00 billion in senior notes across various maturities and interest rates. This includes $900 million in Floating Rate Notes due 2018, $1.6 billion in 1.650% Senior Notes due 2018, $1.5 billion in 2.450% Senior Notes due 2020, $500 million in 3.000% Senior Notes due 2022, and $500 million in 3.500% Senior Notes due 2025. The notes are unsecured, will rank equally with other senior unsecured indebtedness, and are junior to liabilities of subsidiaries. This move signals Cisco's proactive approach to managing its capital structure and funding its operations or strategic initiatives.

Key Highlights

  • 1Cisco Systems entered into an underwriting agreement on June 10, 2015, for a public offering of senior notes.
  • 2The offering is expected to raise a total of $5.00 billion in debt financing.
  • 3The notes offered include $900 million in Floating Rate Notes due 2018, and various fixed-rate notes maturing in 2018, 2020, 2022, and 2025.
  • 4Interest rates on the fixed-rate notes range from 1.650% to 3.500% per annum.
  • 5The Floating Rate Notes will bear interest at three-month LIBOR plus 0.31%.
  • 6The senior notes are unsecured and rank equally with other senior unsecured indebtedness of Cisco.
  • 7The offering is expected to be completed by June 17, 2015.

Frequently Asked Questions

The primary purpose of this 8-K filing is to report Cisco Systems' entry into a material definitive agreement, specifically an underwriting agreement, for a public offering of senior notes. This is to inform investors about the company's debt issuance activities.

Cisco is raising a total of $5.00 billion through this offering. The notes include $900 million of Floating Rate Notes due 2018, $1.6 billion of 1.650% Senior Notes due 2018, $1.5 billion of 2.450% Senior Notes due 2020, $500 million of 3.000% Senior Notes due 2022, and $500 million of 3.500% Senior Notes due 2025.

As unsecured notes, they do not have specific collateral backing them. This means that in the event of bankruptcy or liquidation, holders of these notes would have a claim on Cisco's general assets, but these claims would be subordinate to any secured debt. Furthermore, the notes structurally rank junior to all liabilities of Cisco's subsidiaries, meaning that creditors of the subsidiaries would be paid before any funds could be repatriated to the parent company to service these notes.

The offering of these senior notes is expected to be completed on June 17, 2015.