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Johnson Controls International plc 8-K Report, Material Agreement (Feb 7, 2017)

Filed February 7, 2017For Securities:JCI

Summary

Johnson Controls International plc (JCI) announced on February 7, 2017, the successful completion of a $500 million offering of 4.500% Senior Notes due 2047. This offering, underwritten by Citigroup Global Markets Inc. and J.P. Morgan Securities LLC, was established through an Underwriting Agreement dated February 2, 2017, and the notes were issued pursuant to a Base Indenture and a Second Supplemental Indenture dated February 7, 2017. The proceeds from this debt issuance are earmarked for general corporate purposes, which may include acquisitions, working capital, share repurchases, dividends, capital expenditures, subsidiary investments, and debt repayment, including a portion of its outstanding commercial paper. The new senior notes are unsecured, unsubordinated obligations of JCI, ranking senior to existing and future subordinated debt but junior to secured debt and structurally junior to obligations of its subsidiaries. The notes mature on February 15, 2047, with interest payable semi-annually starting August 15, 2017. The company retains the option to redeem the notes under specified conditions prior to maturity, including a "make-whole" provision or at par after a certain date, and holders have a right to require repurchase in the event of a Change of Control Triggering Event.

Key Highlights

  • 1Completed a $500 million offering of 4.500% Senior Notes due February 15, 2047.
  • 2Proceeds to be used for general corporate purposes, including potential acquisitions, share repurchases, and debt reduction.
  • 3Notes are unsecured and unsubordinated obligations of the company.
  • 4Holders have the right to require repurchase under a Change of Control Triggering Event.
  • 5Company has the option to redeem notes prior to maturity at specified prices.
  • 6Maturity date of the new notes is February 15, 2047.

Frequently Asked Questions

The net proceeds from the $500 million offering of Senior Notes due 2047 are intended for general corporate purposes. This broad category may include funding acquisitions, increasing working capital, repurchasing the company's ordinary shares, paying dividends, making capital expenditures, investing in subsidiaries, and repaying existing indebtedness, such as a portion of its commercial paper.

The 4.500% Senior Notes due 2047 are unsecured and unsubordinated obligations of Johnson Controls International plc. They rank senior in payment to any existing or future subordinated indebtedness, equal to any non-subordinated indebtedness, but effectively junior to any secured indebtedness of the company and structurally junior to any debt or obligations incurred by its subsidiaries.

The notes mature on February 15, 2047, and carry a fixed interest rate of 4.500% per annum, payable semi-annually on February 15 and August 15 each year, with the first payment on August 15, 2017. The company can redeem the notes under certain conditions, including a 'make-whole' provision before August 15, 2046, and at par thereafter. Holders also have a put option to sell the notes back to the company at 101% of principal plus accrued interest if a Change of Control Triggering Event occurs.

The offering was underwritten by Citigroup Global Markets Inc. and J.P. Morgan Securities LLC, acting as representatives for themselves and other underwriters named in the Underwriting Agreement.