What debt did Ingersoll Rand issue in this transaction?

The company issued senior unsecured notes in five series: $700 million of 5.197% notes due June 15, 2027; $750 million of 5.176% notes due June 15, 2029; $500 million of 5.314% notes due June 15, 2031; $750 million of 5.450% notes due June 15, 2034; and $600 million of 5.700% notes due June 15, 2054. Interest is payable semi-annually beginning December 15, 2024.

How will the proceeds be used?

Proceeds from the 2034 and 2054 notes were used to repay in full the existing senior secured credit facilities. Per the press release, $1,236 million of the $3,276 million in net proceeds repaid term loans, $2,000 million will partially fund the cash consideration for the ILC Dover acquisition, and the remainder will fund general corporate purposes. Absent a special mandatory redemption, the 2027, 2029 and 2031 notes' proceeds are intended to partially fund the acquisition's cash consideration, with any remaining cash consideration funded from cash on hand.

What happens to the 2027, 2029 and 2031 notes if the acquisition does not close?

If the acquisition is not consummated by the Special Mandatory Redemption End Date, or if the company notifies the trustee it will not pursue the acquisition, the company must redeem all outstanding 2027, 2029 and 2031 notes at 101% of principal plus accrued and unpaid interest. The 2034 and 2054 notes are not subject to this provision.

What are the key terms of the new revolving credit facility?

The company entered into a senior unsecured $2.6 billion revolving credit facility with Citibank, N.A. as administrative agent. It matures five years from May 10, 2024, subject to up to two additional one-year extensions. Borrowings bear interest at Term SOFR plus a 0.10% adjustment and an applicable margin tied to the company's credit rating, ranging from 1.000% to 2.000% per annum across the rating levels shown. The facility's covenants restrict liens, asset dispositions, mergers and sale-and-leaseback transactions, subject to exceptions.

How did the rating agencies respond to these transactions?

According to the press release, on May 6, 2024, S&P, Fitch and Moody's each upgraded Ingersoll Rand one notch. The new ratings are BBB from S&P, BBB from Fitch and Baa2 from Moody's. The upgrade was attributed to consistent operating performance and the restructuring of the capital structure to fully unsecured.

IR 8-K: Material Agreements, Financial Events & More

01—Abstract

Summary

Summary of the 8-K filed May 10, 2024. Cited figures are marked; the original filing is the authoritative source.

On May 7, 2024, Ingersoll Rand Inc. entered into an underwriting agreement for the issuance of $3.3 billion^a of senior unsecured notes in five tranches: $700 million of 5.197% notes due 2027, $750 million of 5.176% notes due 2029, $500 million of 5.314% notes due 2031, $750 million of 5.450% notes due 2034, and $600 million of 5.700% notes due 2054.

The notes were issued on May 10, 2024 under a base indenture dated August 14, 2023, with Deutsche Bank Trust Company Americas as trustee. The company used proceeds of the 2034 and 2054 notes to repay in full its existing senior secured credit facilities. Per the press release, $1,236 million^b of the net proceeds of $3,276 million repaid term loans, and $2,000 million is to partially fund the cash consideration for the ILC Dover acquisition.

On the same date, the company entered into a new $2.6 billion^c senior unsecured revolving credit facility with Citibank, N.A. as administrative agent. The facility matures five years from closing, subject to up to two one-year extensions, and its financial covenant requires a ratio of adjusted consolidated total net debt to EBITDA of not more than 3.50 to 1.00, with an option to increase to 4.00 to 1.00 following qualified acquisitions. The 2027, 2029 and 2031 notes are subject to a special mandatory redemption at 101% of principal plus accrued interest if the acquisition is not consummated by the specified deadline or the company notifies the trustee it will not pursue it.

The company stated that, absent such a redemption, it intends to use those notes' proceeds to partially fund the acquisition's cash consideration. The press release states that all three rating agencies upgraded the company one notch on May 6, 2024, to BBB (S&P), BBB (Fitch) and Baa2 (Moody's), and management described the transactions as completing the company's secured refinancing and making its debt portfolio fully unsecured.

02—Key points

Key Highlights

Issued $3.3 billion of senior unsecured notes in five tranches maturing 2027, 2029, 2031, 2034 and 2054, with coupons ranging from 5.176% to 5.700%.
Repaid in full the existing senior secured credit facilities, including $1,236 million of term loans per the press release, making the debt structure fully unsecured.
Entered into a new $2.6 billion senior unsecured revolving credit facility maturing in five years, with up to two one-year extensions.
Net proceeds of $3,276 million, with $2,000 million earmarked to partially fund the cash consideration for the ILC Dover acquisition.
Revolver financial covenant caps adjusted consolidated total net debt to EBITDA at 3.50 to 1.00, increasable to 4.00 to 1.00 after qualified acquisitions.
The 2027, 2029 and 2031 notes carry a special mandatory redemption at 101% of principal if the acquisition is not consummated or the company will not pursue it.
All three rating agencies upgraded the company one notch on May 6, 2024, to BBB (S&P), BBB (Fitch) and Baa2 (Moody's).

03—Questions

Frequently Asked Questions

What debt did Ingersoll Rand issue in this transaction?
The company issued senior unsecured notes in five series: $700 million of 5.197% notes due June 15, 2027; $750 million of 5.176% notes due June 15, 2029; $500 million of 5.314% notes due June 15, 2031; $750 million of 5.450% notes due June 15, 2034; and $600 million of 5.700% notes due June 15, 2054. Interest is payable semi-annually beginning December 15, 2024.
How will the proceeds be used?
Proceeds from the 2034 and 2054 notes were used to repay in full the existing senior secured credit facilities. Per the press release, $1,236 million of the $3,276 million in net proceeds repaid term loans, $2,000 million will partially fund the cash consideration for the ILC Dover acquisition, and the remainder will fund general corporate purposes. Absent a special mandatory redemption, the 2027, 2029 and 2031 notes' proceeds are intended to partially fund the acquisition's cash consideration, with any remaining cash consideration funded from cash on hand.
What happens to the 2027, 2029 and 2031 notes if the acquisition does not close?
If the acquisition is not consummated by the Special Mandatory Redemption End Date, or if the company notifies the trustee it will not pursue the acquisition, the company must redeem all outstanding 2027, 2029 and 2031 notes at 101% of principal plus accrued and unpaid interest. The 2034 and 2054 notes are not subject to this provision.
What are the key terms of the new revolving credit facility?
The company entered into a senior unsecured $2.6 billion revolving credit facility with Citibank, N.A. as administrative agent. It matures five years from May 10, 2024, subject to up to two additional one-year extensions. Borrowings bear interest at Term SOFR plus a 0.10% adjustment and an applicable margin tied to the company's credit rating, ranging from 1.000% to 2.000% per annum across the rating levels shown. The facility's covenants restrict liens, asset dispositions, mergers and sale-and-leaseback transactions, subject to exceptions.
How did the rating agencies respond to these transactions?
According to the press release, on May 6, 2024, S&P, Fitch and Moody's each upgraded Ingersoll Rand one notch. The new ratings are BBB from S&P, BBB from Fitch and Baa2 from Moody's. The upgrade was attributed to consistent operating performance and the restructuring of the capital structure to fully unsecured.

04—Continue

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