Summary
Cisco Systems, Inc. (CSCO) announced on September 13, 2016, its entry into a material definitive agreement for an underwritten public offering of senior notes. This offering aims to raise a significant amount of capital through various debt instruments with different maturity dates and interest rates. The company is issuing a total of $6.25 billion in senior notes, including $500 million in floating-rate notes due 2019, and fixed-rate notes maturing in 2019, 2021, 2023, and 2026, with aggregate principal amounts of $1.5 billion, $2 billion, $750 million, and $1.5 billion, respectively. The proceeds from this offering will contribute to Cisco's overall financial strategy and capital management.
Key Highlights
- 1Cisco Systems entered into an underwriting agreement on September 13, 2016, for a public offering of senior notes.
- 2The company plans to issue a total of $6.25 billion in senior notes.
- 3The offering includes $500 million in Floating Rate Notes due September 20, 2019, with interest tied to three-month LIBOR plus 0.340%.
- 4Fixed-rate notes with varying maturities and interest rates are also being issued, including $1.5 billion due 2019 (1.400%), $2 billion due 2021 (1.850%), $750 million due 2023 (2.200%), and $1.5 billion due 2026 (2.500%).
- 5The notes are unsecured and will rank equally with existing senior unsecured indebtedness, but structurally junior to subsidiary liabilities.
- 6The offering is expected to be completed on September 20, 2016.
- 7The underwriting agreement was filed as an exhibit to the 8-K.
Frequently Asked Questions
Cisco Systems is raising a total of $6.25 billion through the issuance of senior notes.
The offering includes $500 million in Floating Rate Notes due 2019, $1.5 billion in 1.400% Senior Notes due 2019, $2 billion in 1.850% Senior Notes due 2021, $750 million in 2.200% Senior Notes due 2023, and $1.5 billion in 2.500% Senior Notes due 2026.
While the specific use of proceeds is not detailed in this 8-K filing, debt offerings are typically used for general corporate purposes, which can include funding operations, acquisitions, capital expenditures, or refinancing existing debt.
The new senior notes will be unsecured and will rank equally in right of payment with all of Cisco's other existing and future senior unsecured indebtedness. However, they will rank structurally junior to all liabilities of Cisco's subsidiaries.