8-KMaterial AgreementsFinancial EventsExhibits & Filings

Eaton Corp plc 8-K Report, Material Agreement (Nov 26, 2012)

Filed November 26, 2012For Securities:ETN

Summary

Eaton Corp plc (ETN) filed an 8-K on November 26, 2012, reporting on the entry into a material definitive agreement concerning senior notes. The company, through its indirect subsidiary Turlock Corporation, issued an aggregate of $5.3 billion in senior notes across multiple maturities (2015, 2017, 2022, 2032, and 2042) with varying interest rates. The primary purpose of this significant debt issuance was to fund a portion of the acquisition of Cooper Industries plc. The notes are initially secured by the net proceeds held in escrow and will become unsecured, unsubordinated obligations of Eaton following the transaction's closing. The issuance is coupled with a registration rights agreement to facilitate the exchange of these notes for registered notes, with provisions for additional interest in case of default in meeting registration obligations. The filing also details covenants, events of default, and change of control provisions related to the notes, providing insight into the financial structure supporting this major acquisition.

Key Highlights

  • 1Eaton Corp plc subsidiary Turlock Corporation issued $5.3 billion in senior notes across five maturities (2015-2042).
  • 2The debt issuance is primarily to finance a portion of the acquisition of Cooper Industries plc.
  • 3Notes are initially secured by escrowed proceeds and will become unsecured, unsubordinated obligations of Eaton post-acquisition.
  • 4The company and certain subsidiaries provided guarantees for the notes.
  • 5A registration rights agreement mandates the exchange of these notes for registered securities within 360 days.
  • 6Failure to meet registration requirements may result in additional interest payments, capped at 1.00% per annum.
  • 7The indenture includes covenants related to asset sales, liens, and activities prior to the acquisition's completion.

Frequently Asked Questions

The primary purpose of issuing $5.3 billion in senior notes was to secure funding for a portion of the cash consideration required for Eaton's proposed acquisition of Cooper Industries plc.

If the acquisition is not completed by May 21, 2013, the notes will be redeemed at a price of 101% of their aggregate principal amount, plus accrued and unpaid interest.

Initially, the notes are secured by escrowed proceeds. Upon consummation of the acquisition, they will become unsecured and unsubordinated obligations of Eaton, ranking equally with other unsecured, unsubordinated indebtedness. They will be effectively subordinated to any future secured obligations of Eaton.

Eaton and certain of its subsidiaries have provided guarantees for the notes. Additionally, a registration rights agreement requires Eaton to facilitate the exchange of these privately placed notes for publicly registered notes within 360 days, with penalties (additional interest) for non-compliance.