8-KMaterial AgreementsSecurities & ListingRegulation FD+1

CORNING INC /NY 8-K Report, Material Agreement (Apr 5, 2021)

Filed April 5, 2021For Securities:GLW

Summary

Corning Incorporated (GLW) announced a significant share repurchase agreement with Samsung Display Co., Ltd. (SDC) on April 5, 2021. Under this agreement, SDC will convert its 2,300 shares of Series A Convertible Preferred Stock into 115,000,000 shares of Corning's common stock. Corning will then immediately repurchase 35,000,000 of these common shares for approximately $1.52 billion, with payments structured over three years. This transaction represents a material event for Corning, impacting its capital structure and shareholder base. The repurchase is expected to close in April 2021. Additionally, the agreement allows for further repurchases of up to 22,000,000 shares in later years, at Corning's discretion. Alongside the repurchase, a related amendment to the shareholder agreement increases the beneficial ownership limit for SDC and its affiliates from 9% to 15% of Corning's common stock.

Key Highlights

  • 1Corning entered into a Share Repurchase Agreement with Samsung Display Co., Ltd. (SDC) on April 5, 2021.
  • 2SDC will convert preferred stock into 115,000,000 Corning common shares.
  • 3Corning will repurchase 35,000,000 of these common shares for approximately $1.52 billion, payable over three years.
  • 4The initial repurchase is expected to close in April 2021.
  • 5Corning has the option to repurchase an additional 22,000,000 shares between 2024 and 2027.
  • 6The shareholder agreement was amended to allow SDC to own up to 15% of Corning's common stock (fully diluted basis), an increase from 9%.
  • 7The repurchased shares converted from preferred stock will be subject to a seven-year transfer restriction.

Frequently Asked Questions

The primary purpose is for Corning to reduce its outstanding share count by repurchasing a significant block of common shares that will be issued from the conversion of preferred stock held by Samsung Display Co., Ltd. (SDC). This also involves adjusting the ownership terms between the two companies.

Corning will be spending approximately $1.52 billion over three years to repurchase shares, which will reduce its cash reserves and outstanding share count. The repurchase will also eliminate SDC's preferred stock from the capital structure. Investors should monitor Corning's cash flow and debt levels in light of this expenditure.

The increase in the ownership limit from 9% to 15% provides SDC with greater flexibility to hold Corning's common stock. This could indicate a continued strategic partnership or investment interest from SDC in Corning, even as a significant portion of its shares are being repurchased.

Yes, the consummation of the initial repurchase is subject to customary closing conditions and is expected in April 2021. Furthermore, Corning has the option, at its sole discretion, to repurchase an additional 22,000,000 shares in later years (2024-2027), subject to specific pricing formulas.