Summary
Alphabet Inc. (GOOGL) filed an 8-K on April 27, 2016, to report the completion of its debt exchange offers for notes originally issued by its subsidiary, Google Inc. The company successfully exchanged a significant principal amount of its 3.625% Notes due 2021 and 3.375% Notes due 2024. This transaction transitioned the debt issuance from the subsidiary level to the parent company, Alphabet Inc.
Key Highlights
- 1Alphabet Inc. completed debt exchange offers for Google Inc. notes due 2021 and 2024.
- 2Over $826 million in 3.625% Notes due 2021 and over $853 million in 3.375% Notes due 2024 were exchanged.
- 3The exchange effectively moved the debt from Google Inc. to Alphabet Inc.
- 4Following the exchange, approximately $173 million of the Old 2021 Notes and $146 million of the Old 2024 Notes remain outstanding.
- 5Consents were obtained to amend the indentures governing the Google Notes, eliminating substantially all restrictive covenants, including merger and reporting covenants.
- 6New notes issued by Alphabet Inc. (3.625% due 2021 and 3.375% due 2024) are unsecured general obligations of Alphabet and rank equally with other unsecured and unsubordinated debt.
- 7The new Alphabet notes are structurally subordinated to the indebtedness and liabilities of Alphabet's subsidiaries.
Frequently Asked Questions
This 8-K filing reports the completion of Alphabet Inc.'s debt exchange offers for notes originally issued by its subsidiary, Google Inc. It also details the successful exchange of a significant principal amount of these notes and the associated amendments to the debt indentures.
The exchange involved Alphabet's 3.625% Notes due 2021 and 3.375% Notes due 2024, which were originally issued by Google Inc. The company successfully exchanged over $826 million of the 2021 notes and over $853 million of the 2024 notes.
For the Google Notes that remain outstanding, the indentures have been amended to remove most restrictive covenants, including the merger and reporting covenants. The remaining Google Notes, along with the new Alphabet-issued notes, are now governed by these amended terms. The newly issued notes are unsecured general obligations of Alphabet, structurally subordinated to subsidiary debt.
This transaction shifts the debt issuance from a subsidiary (Google) to the parent company (Alphabet). The new notes issued by Alphabet Inc. will rank equally with other unsecured and unsubordinated debt of Alphabet but are structurally subordinated to any debt or liabilities of Alphabet's subsidiaries, including any remaining Google Notes.