8-KMaterial AgreementsFinancial EventsExhibits & Filings

DANAHER CORP /DE/ 8-K Report, Material Agreement (Jun 21, 2016)

Filed June 21, 2016For Securities:DHR

Summary

This Form 8-K filing by Danaher Corporation details significant financing activities undertaken by its wholly-owned subsidiary, Fortive Corporation, in preparation for its separation. Fortive issued a substantial amount of senior unsecured notes totaling $2.5 billion across various maturities and interest rates. Additionally, Fortive entered into a credit agreement establishing a $500 million term loan facility and a $1.5 billion revolving credit facility, of which $500 million was drawn immediately under the term loan. These financing arrangements are directly linked to the planned separation of Fortive from Danaher, with specific provisions and maturity adjustments contingent upon the completion of this separation. Danaher Corporation has fully guaranteed the notes issued by Fortive, with these guarantees set to terminate upon the separation. The proceeds from these facilities are earmarked for payments to Danaher as consideration for asset contributions, fees, and general corporate purposes related to the separation. Investors should note that the success and timing of the Fortive separation are critical to the terms and implications of these debt obligations.

Key Highlights

  • 1Fortive Corporation, a Danaher subsidiary, issued $2.5 billion in senior unsecured notes (1.800% due 2019, 2.350% due 2021, 3.150% due 2026, 4.300% due 2046).
  • 2Fortive secured a $500 million 3-year term loan facility and a $1.5 billion 5-year revolving credit facility, drawing $500 million under the term loan immediately.
  • 3Danaher Corporation provided full and unconditional guarantees for the notes issued by Fortive, which will terminate upon the completion of Fortive's separation.
  • 4The financing is intended to fund asset contributions to Fortive, separation-related expenses, and general corporate purposes.
  • 5Key debt covenants for Fortive include maintaining a Consolidated Net Leverage Ratio of 3.50:1.00 or less and a Consolidated Interest Coverage Ratio of 3.50:1.00 or more.
  • 6Specific terms of the debt and credit facilities, including potential redemption or expiration dates, are tied to the completion of Fortive's separation from Danaher by September 30, 2016.

Frequently Asked Questions

The primary purpose is to finance the planned separation of Fortive Corporation from Danaher Corporation. Proceeds will be used for payments to Danaher as consideration for asset contributions, to cover separation-related fees and expenses, and for Fortive's general corporate purposes. The revolving credit facility also provides liquidity support.

Danaher Corporation fully and unconditionally guarantees the $2.5 billion in senior unsecured notes issued by Fortive. This guarantee will automatically terminate upon the successful completion of Fortive's separation from Danaher. Danaher also acts as a guarantor for Fortive's credit agreement obligations.

If the separation is not completed by September 30, 2016, Fortive will be required to redeem the notes at 101% of their principal amount plus accrued interest. Additionally, the revolving credit facility will expire on September 30, 2016, and all amounts borrowed under the term loan facility will become due on October 31, 2016.

Fortive must maintain a Consolidated Net Leverage Ratio of 3.50 to 1.00 or less, which can increase to 3.75 to 1.00 for four quarters following a significant acquisition. It must also maintain a Consolidated Interest Coverage Ratio of 3.50 to 1.00 or more. These ratios will be tested starting with the fiscal quarter ending September 30, 2016.