01—Abstract
Summary
Summary of the 8-K filed December 13, 2012. Cited figures are marked; the original filing is the authoritative source.
Ecolab Inc. (ECL) filed an 8-K on December 13, 2012, to report the entry into a material definitive agreement for the issuance and sale of $500 milliona aggregate principal amount of its 1.450% Notes due 2017.
The net proceeds from this offering are intended to finance a portion of the cash consideration for Ecolab's pending acquisition of Permian Mud Service, Inc. and its subsidiaries (Champion Technologies, Inc. and Corsicana Technologies, Inc.). The Notes are senior unsecured and unsubordinated obligations, ranking equally with other senior unsecured debt. The filing also outlines specific conditions under which the Notes can be redeemed or repurchased by the company.
A significant event for noteholders is the potential for a special optional redemption at 101%b of the principal amount if the acquisition does not close by May 3, 2013. Furthermore, specified change of control events, coupled with a ratings downgrade by both Moody's and S&P, trigger a change of control repurchase event, requiring Ecolab to offer to repurchase the Notes at 101% of their principal amount.
02—Key points
Key Highlights
- Ecolab issued $500 million of 1.450% Notes due 2017.
- Net proceeds are earmarked to fund a portion of the acquisition of Permian Mud Service, Inc. and its subsidiaries.
- The Notes are senior unsecured and unsubordinated debt.
- A special optional redemption at 101% is possible if the acquisition does not close by May 3, 2013.
- Change of control provisions are in place, requiring a repurchase offer at 101% under specific conditions (including a ratings downgrade).
- The Indenture includes covenants restricting the company's ability to incur liens, engage in sale-leaseback transactions, and transfer restricted subsidiary assets.
- The offering was conducted under Ecolab's effective automatic shelf registration statement.
03—Questions
Frequently Asked Questions
What is the primary purpose of issuing these new Notes?
The primary purpose of issuing the $500 million of 1.450% Notes due 2017 is to finance a portion of the cash consideration required for Ecolab's pending acquisition of Permian Mud Service, Inc. and its subsidiaries, including Champion Technologies, Inc. and Corsicana Technologies, Inc.
What happens if the acquisition of Permian Mud Service does not go through?
If the acquisition of Permian Mud Service does not consummate on or before May 3, 2013, or if the related merger agreement is terminated by that date, Ecolab has the option to redeem all of the Notes at a redemption price equal to 101% of the aggregate principal amount, plus accrued interest. Alternatively, the proceeds may be used for general corporate purposes.
What are the implications of a 'change of control' for these Notes?
Under the Indenture, a 'change of control repurchase event' occurs if specified changes in control happen and are accompanied by a downgrade of the Notes' investment grade rating by both Moody's and S&P within a defined timeframe. In such an event, Ecolab must offer to repurchase the Notes at 101% of their principal amount, unless the company chooses to redeem them first.
What is the seniority and security of these Notes?
The Notes are senior unsecured and unsubordinated obligations of Ecolab Inc. This means they rank equally with all other existing senior and unsubordinated indebtedness of the company and are not backed by any specific collateral.
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