Summary
Cintas Corporation announced on December 4, 2007, the execution of an Underwriting Agreement for the issuance and sale of $250,000,000 aggregate principal amount of 6.125% Senior Notes due 2017. These notes are issued by its wholly-owned subsidiary, Cintas Corporation No. 2, and are guaranteed by Cintas Corporation and other subsidiary guarantors. The primary purpose of this issuance is to repay a portion of Cintas Corporation No. 2's outstanding commercial paper borrowings, which amounted to approximately $464 million as of November 30, 2007. The net proceeds from this offering are expected to be approximately $247.8 million. This move indicates a strategic shift in the company's short-term financing, replacing higher-cost commercial paper with longer-term, fixed-rate debt. Investors should note the interest rate of 6.125% and the semi-annual payment schedule. The indenture governing these notes includes covenants restricting the company's ability to incur liens, engage in sale-leaseback transactions, and, under certain conditions, merge or sell assets. Additionally, a change of control event could trigger a mandatory repurchase offer for the notes if they are downgraded below investment grade.
Key Highlights
- 1Cintas Corporation is issuing $250 million in 6.125% Senior Notes due 2017 through its subsidiary, Cintas Corporation No. 2.
- 2The proceeds will be used to repay approximately $247.8 million of existing commercial paper borrowings.
- 3The new notes carry a fixed interest rate of 6.125% per annum, payable semi-annually.
- 4The issuance is guaranteed by Cintas Corporation and other subsidiary guarantors.
- 5The Indenture includes covenants that limit the company's and its subsidiaries' ability to incur liens, engage in sale-leaseback transactions, and sell significant assets.
- 6A change of control event, coupled with a below investment-grade rating, could require Cintas to repurchase the notes at a premium (101% of principal).